Chief Minister SM Krishna, who presented the state budget on Monday, has taken the initiative through a new policy that would create a separate class of wholesale and retail licences to sell only beer parallel to the existing system.

Mr Krishna, who also holds the finance portfolio, said, ``The trend now is to discourage consumption of hard liquor,'' and added that his policy was in line with this trend.

According to Mr Harish Bhatt, (director vice-president finance), UB Group, the industry had been pressing the state government to differentiate between storage of beer and liquor as the younger population was opting for low-priced liquor to beer as both were availble at the same price. However, the latest budget proposal would increase demand for beer, Mr Bhatt said.

Added Mr KP Balasubramanium, vice-chairman and managing director, Mysore Breweries Ltd, "Delinking beer from liquor is an international practice, which the state has decided to adopt. This would boost beer sales currently stagnating at 65 million cases per annum."

Moreover, the licence fee for storing beer is being proposed to be brought down to Rs 1 lakh per annum from Rs 3-10 lakhs per year. As per the Karnataka's budget for 2001-02, 30 wholesale licences to sell only beer will be granted with a licence fee of Rs 3 lakh per annum.

Further, 300 retail licences will be granted to sell bottled beer only and not for consumption in the premises. These licences will be granted only to departmental and provision stores having a prescribed turnover. The licence fee for such shops will range between Rs 50,000 to Rs 1 lakh per annum depending upon the location.

Finally, the move is likely to impact beer prices. The Bangalore-based Khodays revealed that the prices are likely to drop, which will push sales further.

On the wine front too, the government plans to offer 50 retail licences to sell bottled wine. The state would charge Rs 15,000 per annum as licence fee. The licences will be extended only to departmental and provision stores that match the prescribed norms and not for consumption within the premises.

To ensure quality of liquor, another step in the policy is to make it compulsory for manufacturers to affix holograms on liquor bottles from January 2002.

The policy also proposes to ban the sale of toddy in a phased manner in Gulbarga and Raichur districts from the next fiscal.