A short report to understand How alcohol drives the world economy?

1. Importance of Alcohol to the Indian Government
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3. The Liquor market is extremely important to the state
governments as it contributes around 10-20% of state’s
own tax revenue in majority of the states, Excise Duty on
Alcohol being the third largest contributor. As it is an easy
source of revenue, State governments are becoming more
and more dependent on it to cover portion of expenses.
Revenue in the Indian alcoholic drinks market amounts to
USD 52,575Mn in 2020. The market is expected to grow
annually by 6.8% (CAGR 2020-2023). In relation to total
population figures, per person revenues of US$38.10 are
generated in 2020.
There was a sharp downfall in the Alcohol industry with
revenue loss of INR 3000 Crore due to COVID-19 lockdown.
There was sale of INR 100 Crore worth alcohols in 9
hours of reopening, as stated by state excise department.
This is a situation of panic buying with long queues visible in
front of shops.
INTRODUCTION
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4. SOURCES OF REVENUE
Sales Tax
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
US
China
Japan
Brazil
UK
Germ
any
India
Top revenue generators in the
world (INR crores)
0
5000
10000
15000
20000
25000
30000
35000
Tam
ilNadu
Haryana
M
aharastra
Karnataka
Uttar…
Andhra…
Telangana
Revenue generated by top liquor
selling states (INR crores)
4
14% - 27%
Liquor sales tax
Excise duty
Liquor excise duty
75% - 300%
Duty rate across states
21%
14%
13%
11%
10%
9%
9%
6%
4% 3%
Revenue share among states
Tamil Nadu
Haryana
Maharastra
Karnataka
UP
Andhra Pradesh
Telangana
MP
Rajasthan
Punjab
Rs. 1.75 Lakh CR*Rs. 1.7 Lakh CR*
* Indicates 2019-20 country estimate
Sales tax across states
Note: 18% GST is charged by the government to compensate for the raw material input cost
Contribution to the GDP
Year
Revenue (lakh
CR INR)
Share in GDP
2017 1.99 1 %
2018 2.17 1.06 %
2019 2.48 1.18 %

5. 5.2
10.4
15.79
21.37
0
5
10
15
20
25
2017 2018 2019 2020
Alcohol consumption growth (%) in India
Base Year: 2016
9.8
7.2
8 7.8
11.4
13.4
5.7
0
2
4
6
8
10
12
14
16
US China Japan Brazil UK Germany India
Alcohol consumption per person (in liters)
70
75
20 17 15 15
0
10
20
30
40
50
60
70
80
Delhi Andhra
Pradesh
Haryana Karnataka Rajasthan Tamil Nadu
Hike (%) in alcohol prices due to COVID –
19 in India
-645
-2000
-6000
-2000 -1900
-4050
-7000
-6000
-5000
-4000
-3000
-2000
-1000
0
Delhi Maharastra Haryana
West
Bengal Rajasthan Tamil Nadu
Revenue (CR INR) due to COVID – 19 in India
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6. While Alcohol is the major source of revenue to state governments, it is not
contributing enough to cover charges borne by government to avail benefits.
According to a study conducted by NIMHANS, Karnataka- for every INR 1 revenue
from sale of Alcohol, government is losing more than INR 2 in providing
healthcare benefits and lost productivity. Roughly one-fifth of most State
government budgets are funded by booze, share is going up by the year.
With the prohibition of Alcohol in the states like Gujarat and Bihar, how do those state
governments manage their Revenue?
CONCLUSION
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7. THANK YOU
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