Mint Primer | Telangana liquor crisis: What just went wrong?

Mint Primer | Telangana liquor crisis: What just went wrong?

United Breweries Ltd said it has suspended beer supplies to TGBCL. As there was no increase in the base price of beer, it led to losses for UBL.

Summary

• Payments for alcohol supplies after September have been cleared, but a backlog of unpaid dues remains unresolved. The state government has promised to settle the dues in instalments, but there is no clear timeline for full settlement.

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Why is Telangana unable to pay?

Telangana delayed payments between February and August 2024 as it faced lower-than-expected revenue and increased expenditure from poll promises and various schemes. The state’s non-tax revenue dived in 2024-25. As against the estimated revenue of ₹35,208.44 crore, the realisation was only ₹5,217.26 crore till November, as per data from the Comptroller and Auditor General. Payments for alcohol supplies after September have been cleared, but a backlog of unpaid dues remains unresolved. The state government has promised to settle the dues in instalments, but there is no clear timeline for full settlement.

Telangana owes a substantial sum, estimated by industry bodies at ₹3,900 crore, to alcohol businesses. Despite Telangana Beverages Corporation Ltd (TGBCL) acknowledging outstanding payments, the state’s ability to clear these dues remains uncertain. Mint explains:

What is TGBCL and how does it operate?

TGBCL is a state government entity that controls the sale of alcohol in Telangana, managing both wholesale and retail markets. TGBCL buys alcohol from suppliers and resells it to retailers through its depots. However, since 2018-19, it has not adjusted the prices it pays to suppliers despite inflation. The lack of price revisions and delayed payments have created financial strain for alcohol businesses, making operations in the state difficult. United Breweries Ltd (UBL), for instance, said it has suspended beer supplies to TGBCL. As there was no increase in the base price of beer, it led to losses for UBL.

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How much alcohol is consumed in Telangana?

Alcohol sales in Telangana amount to ₹40,000 crore annually across 3,000 retail outlets. The state is the fifth largest drinker in India, according to the Confederation of Indian Alcoholic Beverage Companies (the pecking order is led by Karnataka). TGBCL also collects a 30% advance excise duty, which is refunded to retailers with the final payment for alcohol.

How do beer prices in Telangana compare?

They are much lower than in neighbouring Karnataka and Maharashtra. A case of beer in Telangana costs ₹290-315 to the state, 47% cheaper than in Karnataka and Maharashtra ( ₹550-600). TGBCL had a ‘price fixation committee’ which took submissions from beer suppliers. It concluded sittings in August but there has been no further action on the matter, say industry associations. Meanwhile, the pricing disparity, coupled with rising production costs, needled the operations of firms like UBL.

Read more: Zero-proof drinks for Dry JanuaryWhat do industry bodies say?

The Brewers Association of India has raised concerns over the outdated pricing structure in Telangana. Established in 2018-19, it remains far below current industry standards. Others say the ₹3,900-crore dues from TGBCL add substantial financial strain. The bodies have urged the state government to revise pricing to reflect inflation. UBL said three-year inflation of products like barley, sugar, fuel and electricity, glass bottles etc., is between 13-110%. Nearly all the beer sold in the state comes in glass bottles.