Jagan Government in Andhra Pradesh already raised 8,300 Crore loans using liquor bonds.
The revenue the government earns through liquor sales is the collateral for these bonds.
The government says it is not enough and is gearing up to earn 25,000 Crore more.
The government has imposed a ‘Special Margin’ on liquor and the amount earned under this head can be used for these bonds.
The government is decreasing VAT and increasing the ‘Special Margin’.
Thus the revenue to the state exchequer will decrease and the Special Margin will increase. When the Special Margin increased, the eligibility for loans also increase.
But then, the issue is that you are mortgaging the future revenues and the loans raised will be spent in a flash on freebies.
That means the state will not have liquor revenues offering help in its day-to-day administration.
Slowly the state is getting into a debt trap and will be very difficult to come out of the mess.
In a moderate welfare state like that of previous governments, revenues through liquor sales and petroleum products sales are very crucial to managing day-to-day affairs of salaries, pensions, welfare, and infrastructure development.
So, future governments should continue to neglect infrastructure development due to the loss of liquor revenues.
Courts should immediately step in to save Jagan Government from this liquor addiction.