Beer consumers in Karnataka should brace themselves for a 10% hike in prices starting in February, according to a proposal by the Siddaramaiah government just ahead of the 2024-25 Karnataka budget. This move follows previous increases, including a 10% rise in beer duty and a 20% hike across all Indian Made Liquor (IML) categories in July 2023, during the Congress government’s tenure.
The rationale behind the sudden increase lies in the government’s attempt to boost demand for IML, a significant contributor to the state’s revenue. Officials from the excise department revealed that some Indian Made Foreign Liquor (IMFL) consumers had shifted to stronger beer following the 20% hike in IML prices last July. The 10% additional excise duty (AED) on beer, slated to be implemented from the first week of February, aims to lure these consumers back to IML.
This adjustment in pricing dynamics indicates a notable surge in the sales of non-IML beverages, which, although constituting a slightly smaller share of the state’s revenue, have witnessed substantial growth. In 2023, beer sales saw a considerable uptick compared to the previous year, whereas IML sales experienced only marginal growth. Certain districts, including Belagavi North, Belagavi South, Dharwad, Gada, and Udupi, reported negative growth in IML sales, with 10 districts registering sub-1% growth.
According to excise revenue data for the fiscal year 2022-2023, IML made a significant contribution of Rs 24,663.85 crores, while beer revenue amounted to Rs 4,460 crores before the price hike in July 2023. In the preceding fiscal year 2021-2022, IML contributed Rs 22,889.10 crores, with beer revenue standing at Rs 2,757.30 crores.