Madhya Pradesh Government's New Excise Arrangement :2004-05

No: ---- Dated: Apr, 01 2004

Madhya Pradesh Government's New Excise Arrangement : 2004-05

The Madhya Pradesh government has taken a significant decision to do away with the contract auction system in vogue since 1996 in the state and to allot the country-foreign liquor shops on prescribed licence fee from the next financial year. Detailed directives in this regard have been issued.

The contract auction system in vogue since 1996 has encouraged monopoly, the state government has decided that the country and foreign liquor shops would be allotted on payment of prescribed licence fee after inviting applications on the basis of minimum quantity. In case of more than one application the allotment would be made through lottery.

It may be mentioned here that in order to improve the excise system and for buoyancy in revenue collection last year the state government had sent a study team to Uttar Pradesh , Maharashtra, Tamil Nadu , Rajhsthan , Chhattisgarh , Haryana and Punjab and got reports prepared in this regard. On the basis of the reports different alternatives were presented before the cabinet sub committee on excise. The committee recommended abolition of the monopoly system and to introduce the lottery system inviting applications for this. Following this the state government has issued detailed directives.

This system was introduced in Uttar Pradesh in 2001-02 and is still in vogue there. In Chhattisgarh the situation of monopoly arose due to auction adjustment system in the year 2002-03.

Uttar Pradesh recorded about 6 percent loss in revenue in the year 200102 (the initial year) but next year that state registered a record 30 percent increase.

Under the new arrangement a committee headed by district collector would allot the shops. The new arrangement would be introduced from April 1, 2004. The notification for allotment is likely to be issued in the first week of March and for actual lottery in the second week of April. The sale of applications would be made from the offices of district collector/district excise officer/sub divisional magistrate and in the branches of the State Bank of India/State Bank of Indore dealing with government transactions at district headquarter.

The price of application form for shops in rural area/nagar panchayat areas would be Rs. one thousand, Rs. two thousand for the shops in municipal corporation and municipal areas barring the Rajbhogi ones and Rs. three thousand for the shops in municipal corporation areas of Indore, Jabalpur, Bhopal and Gwalior. A person can give only one application for one shop but he can give separate applications for

more than one shops. Details about consumption, minimum quantity, licence fee etc would be enclosed with the application forms. The shops remaining unallotted after first round of the lottery would be allotted in the second and third round for which dates would be decided by the district committee.

There are about 2207 country liquor shops, 463 sub-shops and 581 foreign liquor shops in the state. Revenue of Rs. 864.46 crore was received from auction of these shops in the year 2003-04. Revenue of Rs. 968 crore is estimated in the first year of the new arrangement. For this, the department would have to further strengthen the enforcement system. The sanction for filling up about 300 vacancies of excise sub inspector/constable, to provide new arms and ammunition to them and to permit them to hire additional vehicles as and when required. This is likely to entail a maximum expenditure of Rs. 6 crore in a year. This would not only lead to increase in revenue but would also help curb excise offence and more efficient implementation of the new arrangement would be ensured.

As per the notification of the Government of India, directives have been given for supply of petrol/products by mixing 5 percent denatured (power alcohol/ ethanol.) The Madhya Pradesh government has issued a notification to this effect on February 4, 2004 and the excise commissioner has been authorized to issue licence to the petrol companies for this. As the state has shortage of molasses and it is imported from outside to make liquor, the distilleries of the state have no arrangement for making power alcohol, which are likely to be established gradually. For the time being the petrol companies would import denatured spirit from Maharashtra , Gujrat , Uttar Pradesh and Bihar. For this, licence fee, import permit fee etc are being fixed. This mixture combination would not only save 5 percent petrol but would also reduce the level of air pollution caused by petrol vehicles.