Kerala Liquor Prices Hike: A Marginal Increase Amid Controversy

Liquor prices in Kerala have increased marginally, ranging from ₹10 to ₹50 per 750 ml bottle, due to higher raw material costs. The government refused to raise the procurement price but abolished the 5% turnover tax and increased the sales tax by 4%. Opposition Leader V.D. Satheesan criticized the hike, saying it would worsen the cost of living crisis and reduce homemakers' income. Kerala has high per capita liquor consumption rates.

Introduction:
The southern Indian state of Kerala, known for its high per capita liquor consumption rates [1], recently witnessed a marginal increase in liquor prices due to higher raw material costs. The government's decision to compensate for the withdrawal of the 5% turnover tax by increasing the sales tax by 4% has stirred controversy, with opposition leaders criticizing the hike for exacerbating the cost of living crisis [2]. This article delves into the implications of Kerala's liquor price hike, its impact on consumers, and the broader economic context.

Raw Material Costs and Manufacturer Concerns:
The increase in raw material costs, particularly extra neutral alcohol or spirit, has led manufacturers to demand a hike in retail prices [2]. The state-owned Kerala State Beverages Corporation (Bevco) holds a monopoly in the distribution of liquor, and the disruption in liquor supply to Bevco outlets and hotels due to the rise in raw material prices has caused frustration among consumers [2].

Government's Response and Criticism:
The government's decision to compensate for the withdrawal of the 5% turnover tax by increasing the sales tax was met with criticism from opposition leader V.D. Satheesan, who argued that the hike would worsen the cost of living crisis and reduce homemakers' income [2]. The impact of the hike on the common man, who bears the brunt of the increased prices, has been a significant concern [2].

Implications for Kerala's Economy and Consumers:
The liquor price hike in Kerala comes at a time when the state and the country are grappling with economic uncertainties, including the impact of the COVID-19 pandemic on employment and livelihoods [3]. The hike's implications for Kerala's economy and consumers are multifaceted, and it remains to be seen how the state government will address the concerns raised by opposition leaders and the public.

Conclusion:
Kerala's liquor price hike, driven by higher raw material costs and the government's response to the withdrawal of the 5% turnover tax, has sparked controversy and raised concerns about its impact on the cost of living crisis and the broader economic context. As the state and the country navigate these challenges, it is crucial to monitor the situation closely and consider the implications of policy decisions on consumers and the economy.

References:
[1] Moneycontrol. (2021, January 21). No cheers, Kerala hikes tax on IMFL by 4.95%. Retrieved from https://www.moneycontrol.com/news/business/no-cheers-kerala-hikes-tax-on-imfl-by-4-9589601.html
[2] The Hindu. (2021, February 10). Kerala hikes liquor prices, opposition slams govt. Retrieved from https://www.thehindu.com/news/national/kerala/kerala-hikes-liquor-prices-opposition-slams-govt/article33894912.ece
[3] World Bank. (2020). India COVID-19 Economic Impact: A Baseline Scenario. Retrieved from https://www.worldbank.org/en/topic/poverty/brief/india-covid-19-economic-impact-a-baseline-scenario