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The State government has several options before it including reviving manufacturing Indian Made Liquor (IML) through the State-run units to make the “cheap but safe liquor” a reality in case Chief Minister Siddaramaiah’s plans of providing affordable liquor has to materialise.

While the government is yet to come out with a policy, top officials in the know, feel that quality liquor at cheaper rates can be made available either by bringing down the manufacturing as well as distribution costs or by slashing the excise duties or both.

At present, the cheapest liquor available in the market costs Rs 38 for a 180 ml bottle. At a meeting on Tuesday, Chief Minister Siddaramaiah had directed officials to explore the possibility of introducing a “cheap and safe” liquor for the poor. Siddaramaiah had felt that the labour classes especially, had been hit hard ever since arrack was banned in the State. They had been forced to depend on expensive liquor.

Sources in the excise department point out that arrack (with 37 per cent alcohol content) cost Rs 10.5 for a 100 ml sachet when it was banned in 2007 by the JD(S)-BJP coalition government. On an average, if a consumer bought two sachets, the burden on his pocket would have been Rs 21. Today, he has to shell out Rs 38 for the cheapest brand of a 180 ml liquor bottle (with alcohol content on par with arrack). The coalition government, headed by H D Kumaraswamy, had banned the sale of arrack on health grounds.

The manufacturing cost can be brought down if the government starts its own distilleries to manufactures liquor without compromising on quality. Several brands of liquor manufactured by State-run Mysore Sugar Company (Mysugar) were very popular in the 1970s and 1980s. A particular brand of arrack “spiced arrack” was also popular among the elite.

However, Mysugar closed down liquor manufacturing operations more than a decade ago. The government may soon grant licence for Mysugar to manufacture liquor, the sources said. Sources added that it was unlikely that the government would revoke the ban on arrack as the State has moved beyond the vending system of giving exclusive rights for the sale of arrack in a particular geographical territory by means of an auction. 
Another option to bring down the cost of liquor is slashing the excise duties. In Karnataka, an uniform excise duty of Rs 45 per bulk litre is levied on IML irrespective of the brand and quality. On this, an additional excise duty is imposed depending on the declared price (the price fixed by the manufacturer).

The sources said if AED (which is Rs 97 per bulk litre for the present cheapest brand) is reduced or slashed, then the prices of liquor would automatically go down. At the same time, it means a reduction in revenue mobilisation for the excise department, a cash cow for the government. The excise department has been set a steep target of  Rs 12,400 crore for the year 2013-14. A final decision on Siddaramaiah’s “cheap but safe liquor” for the poor will be made in the State budget proposal in June.