The recently presented Karnataka budget by Chief Minister Siddaramaiah has announced a significant increase in excise duty on alcohol, leading to a rise in liquor prices within the state. As part of the budget, Siddaramaiah disclosed a 20% hike in excise duty, affecting both spirits produced in India and those sold outside the country. In particular, the extra excise duty (AED) for beer has been raised from 175% to 185%, marking a 10% increase.
Following this announcement, shares of prominent Indian alcohol manufacturers, including United Breweries, GM Breweries, Radico Khaitan, and Som Distilleries & Breweries, witnessed a decline in trading.
Industry analysts have expressed concerns over the impact of these price hikes on the spirits and beer sectors in Karnataka. The state's contribution to the overall volume growth of these industries is significant, especially in the case of beer. Therefore, any increase in prices is expected to negatively affect the prospects for volume growth.
The Karnataka budget unveiled by Chief Minister Siddaramaiah amounts to Rs 3,27,747 crore. Out of this total, Rs 2,50,933 crore will be allocated for revenue expenses, Rs 54,374 crore for capital expenditure, and Rs 22,441 crore for debt repayment. This budget presentation marks Siddaramaiah's seventh budget as Chief Minister, setting a record for the highest number of budgets presented by a Chief Minister or Finance Minister in the state.
Overall, the increase in excise duty and extra excise duty is poised to have a substantial impact on the liquor industry in Karnataka, particularly with regard to liquor prices and the consumption patterns of alcoholic beverages in the region.