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Liquor licence issue kicks up row in Kerala

Kerala Excise Minister T Sivadasa Menon's pet project -- setting up of 25 foreign liquor bottling and blending units in Kerala -- is expected to be dissected by his Left Democratic Front colleagues, when the state committee of the ruling front meets on December 9 and 10.

Some of the ruling front constituents are geared to take the former mathematics teacher to task for getting his figures wrong on the demand and supply of the Indian made foreign liquor.

An LDF leader said the minister presented a 'wrong picture' to support his proposal to grant licences to 25 new distilleries in the state, most of which are based in his home district of Palakkad.

The minister has maintained the new blending units are a must as the existing distilleries in Kerala are not in a position to meet the increased demand for liquor in the wake of the arrack ban.

IMFL sales increased by two million cases per annum after arrack (country liquor) was banished from the state.

According to the minister, the total demand for IMFL in Kerala today is 5.2 million cases as against the local supply of 3.2 million cases. The rest came from neighbouring states either through legal or illegal channels. This, according to the minister, gave a boost to smuggling, which in effect affected the revenue of the state.

However, the pro-prohibition LDF constituents have been picking holes in the statistics. According to them, the 17 distilleries functioning in the state now are capable of meeting about 85 per cent of the demand.

The remaining 15 per cent could easily be supplied by the local distilleries if they are allowed to expand their production capacity. In fact, applications of several existing units for capacity expansion were pending when the minister sought to grant licences to 25 units. For reasons not known, the government did not entertain applications from local distilleries for capacity expansion.

The prohibitionists have also questioned the need for enhancing the production capacity in the state since neighbouring states like Tamil Nadu and Karnataka do not accept supplies from other states. This means that the entire liquor produced in the state will have to be consumed within the state.

The prohibitionists say the state has to depend on outside sources only for about 81,000 cases per annum. Quoting figures of the Kerala State Beverages Corporation, the sole distributor for foreign liquor in the state, the prohibitionists say the peak demand in the festival season in September was only 400,000 cases. Out of these, 317,500 cases were supplied by local distilleries.

The government's refusal to allow capacity expansion of the existing units has fuelled allegations of corruption in the issue. Most of the applicants are former arrack contractors, who lost their business empires following the arrack ban imposed by the previous Antony government in 1996.

Many of these arrack contractors have very little experience and technological background in running any blending or bottling unit. The prohibitionists say giving licences to such people, who have strong political clout, is an invitation to manufacture spurious liquor in a big way.

The state cabinet, before which the excise department's proposal to grant licences to 25 units came up for consideration, had decided to place the matter before the state committee to avoid criticism from the coalition constituents on the issue.

The government hopes a decision at the highest policy-making forum will silence some of the constituents, who are viewing the government move suspiciously.

The issue is not expected to have an easy passage in the LDF state committee meeting since the pro-prohibition constituents in the coalition would take the leadership to task for taking the decision without consulting them.

In fact, Opposition leader A K Antony, the architect of the arrack ban, feels the decision to grant licences smacked of foul play. He said the haste with which the government issued licences to five units without inviting applications from the public is mysterious. He demanded a judicial inquiry into the whole affair.

He said he doubted the government's motives and added that there is circumstantial evidence to raise doubts of corruption. The decision was taken in a secretive manner.

Antony said if the 25 distillers are allowed to start producing liquor, it will drive many arrack consumers to foreign liquor defeating the purpose of the arrack ban, which has been widely welcomed in the state.

In fact, the LDF had suggested a move to lift the arrack ban. The LDF move had sparked a big controversy in the state with many coming out openly against it.

The Congress and the prohibitionists have already threatened a prolonged agitation if the government moves ahead with its proposal to allow the new blending units.

Any deal concerning liquor is bound to trigger controversy in Kerala since the liquor trade is the main source of funds for the political parties in the state, where the industry base is very weak.

At present Kerala has 14 distilleries in the private sector and three in the co-operative sector. Of these, only 12 are functioning at present.

According to the projections made by experts, if the state government goes ahead with the decision to give licences to new units, the annual of the state could be met in two-and-a-half months. This means, the units will have to remain idle for the remaining period or find new markets outside the state.

Unfortunately for these units, many states do not entertain supply of liquor from other states.

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