Panel asks Karnataka government to lift 33-year freeze on permitting new liquor shops

Bengaluru: Karnataka can earn hundreds of crores in revenue if new retail liquor shops are opened, which will require lifting a 33-year freeze on issuing these licences, a committee formed by the government has recommended.

The government has not issued new CL-2 (retail liquor shop) and CL-9 (bars and restaurants) licences since 1992.

The committee headed by retired IAS officer K P Krishnan, which is looking at how the state can mobilise additional resources to meet growing expenditure needs, has also recommended hiking the fees for various excise licences. The fees were last revised in 2016-17. 

Just these two measures can help the government generate up to Rs 2,200 crore, the committee has told the government in an interim report, a person with direct knowledge of this told DH. The committee’s recommendation may reignite a debate within the Siddaramaiah administration on issuing new CL-2 and CL-9 licenses. 

“There has been tremendous growth in population since 1992 when the government decided not to issue new licences. We need to recognise the reality that people drink. In villages, liquor bought in bulk from CL-2 stores is being sold and the government isn’t getting any revenue from that,” an official said.

In his first term as CM in 2013, Siddaramaiah advocated for access to affordable liquor in villages.

There are 3,995 CL-2 and 3,637 CL-9 licences, making them prized possessions. 

The existing licences are renewed every year. The freeze on CL-2 and CL-9 has created an artificial scarcity of licences. 

Hundreds of these existing licences get transferred from one holder to another at huge prices every year, running into a few crores, including bribes. The annual fees for a CL-2 licence ranges from Rs 4 lakh to 6 lakh depending on the location. Similarly, CL-9 costs between Rs 4 lakh to Rs 7.5 lakh.

One premium liquor store on MG Road is functioning on a CL-2 licence that was originally held in Anekal. “Our fee is the same for Anekal and MG Road in Bengaluru. But the MG Road store is doing big business and the government isn’t tapping into this potential,” the official pointed out.

The Federation of Wine Merchants Association is not in favour of issuing new licences.

“The current CL-2 licencees are in a pretty bad shape. If the licences are increased, the smaller retail shops will take a major hit in business. There’s already pressure on us to meet consumption demands,” Federation president S Guruswamy said.

(Shantanu Hornad contributed to the reporting)