Will the alcohol industry in India say ‘cheers’ to Budget 2017?

The government’s plan on alcohol is clear- drink as much as you want but pay the bill. While it may sound odd, alcohol itself is a great revenue generator for the exchequer. Believe it or not, most state governments’ budgets are nearly 20% funded by alcohol sale. This is one commodity in India that is consumed by both urban and rural populace.

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In 2015, with 0.2% growth rate, alcohol sector has seen the slowest growth after ages. 2016 wasn’t really a good time for most of the alcohol brands. First there was the sluggish growth. Then the next blow was served by the Nitish Kumar government of Bihar in April when alcohol got banned in the state. And then there was demonetization in November. The alcohol industry in India has seen worse, but this was probably the single bad year after the market attained maturity.

While Gujarat, Nagaland, Mizoram, Manipur and Bihar are the states with order of ban on alcohol, most states have alcohol as the second most profiting means of revenue. Delhi, for instance, earns almost Rs 3000 crores of revenue from liquor every year, that’s almost a little less than 10% of Delhi government’s annual budget.

Alcohol manufacturers’ hub Bengaluru earns excise revenue of 20% of state revenue. Same is the case with West Bengal, which has a few alcohol plants spread over the state. The eastern state earns Rs 32,000 crore from just liquor excise.

However as mentioned earlier, several factors affected the industry big time.

Here is the list of factors that paralyzed the industry last year