Brewery row puts LDF on a sticky wicket

The LDF had mounted a strident attack on the previous Congress-led UDF government over the bar bribery scam following revelations that the then finance minister K M Mani demanded bribes for fulfilling the promise of reopening closed down bars. In an unexpected turn of events, the left front, which used the scam as its main election plank to topple the UDF government, is now facing the heat of yet another liquor scam.

The alleged violation of rules in the allotment of distilleries and breweries in the state is the first corruption scandal of this magnitude to have levelled against the two-and-a-half-year-old Pinarayi Vijayan-led government.

Since 1999, no new permit had been issued to open breweries and distilleries in the state. It was in line with a cabinet decision during the Left regime under E K Nayanar and it had been adopted as a policy by the succeeding governments.

One can gauge the significance of that decision by going through the judgement pronounced by a bench comprising outgoing Chief Justice Dipak Misra and K S Radhakrishnan in the case of State of Kerala vs Kandath Distilleries in 2013.

The order clearly states that the power to grant such permission is the sole prerogative of the state. “The decision ought to be that of the authority concerned and not that of the court. Court would not interfere with or probe into the merits of the decision made by an authority in exercise of its discretion,” it was held.

The Pinarayi Vijayan-led government has cancelled out the cabinet decision of 1999, which paved the way to the historic Supreme Court verdict. Neither the ruling front nor the ministry did take a cue from that judgement, and what has been most intriguing is the surreptitious manner in which sanctions were granted by the excise department.

The end result of arrack ban

Following the arrack ban enforced by the A K Antony government in 1996, the only option left for the operators of distillery units that brewed country-made liquor was to start producing IMFL (Indian Made Foreign Liquor). They were brimming with optimism after three companies - M/s Amrut Distilleries, Palakkad; M/s M/s KS Distilleries, Kannur; and M/s Elite Group of Companies, Thrissur - were given the license to set up breweries.

When the government was flooded with applications for opening brewery units in 1998, a high-level committee, comprising Vinod Rai, John Mathai, Amitabh Kant and Yogesh Gupta was constituted to study and submit a report to the government on the possibility of allotting more breweries.

Taking note of the unusually large number of applications and the potential implications of allowing more breweries in the state, the panel recommended that no company should be granted permission.

The cabinet approved the recommendation, but it was challenged in the High Court by the distilleries whose applications were rejected. The Supreme Court verdict in 2013 put an end to the legal battle waged by companies including the Kandath Distillery, who had been waiting since 1987 for the licence.

What’s brewing in distilleries?

Though they are known as distilleries, the actual distillation takes place outside Kerala. To set up a bottling and blending unit that brews flavoured alcoholic beverages using spirit sourced from other states, it requires only around Rs 12-15 crore.

On the other hand, to open a brewery or a beer manufacturing unit, it would cost around Rs 150 crore. Due to the enormous cost involved, currently there are only three breweries in Kerala - Malabar Breweries, Chalakudy; Premier Breweries, Kanjikode; and United Breweries, Cherthala. The government’s move is to double the number by giving licence to three more units.

The LDF government’s claim that revving up revenues and job generation are the main targets in allowing new breweries could only be taken with a pinch of salt. Even the constituents of the LDF, including the CPI, have been kept in the dark about the entire deal.

It is surprising that those who have been raising a hue and cry over conferring the tag of 'Institution of Eminence' upon the yet-to-be-born Jio Institute by the Centre are conveniently ignoring the move to issue permit to the fictitious ‘Sree Chakra Distilleries’ whose location remains unknown!