Wednesday, May 24, 2006


Year 2005 saw Rajasthan government changing from auction system to a new system of corporation. The aim was to remove the monopolistic nature of the business wherein the contractors were becoming more powerful and in the process consumer, manufacturers and government interest were not being protected.

This new system will make sure that this monopolistic cartel is broken and the situation is a win – win for the other stakeholders. The consumer will get the product at a realistic rate and the government will benefit in terms of revenue. According to a rough estimate the government is set of get revenue of Rs 1350 crore this year Vis a Vis a revenue of Rs 1276 crore last year. Therefore just by doing some structural changes the government will be able to earn Rs 74 crore, not to mention the benefits to the manufacturing companies and the consumer.

No wonder that more brewers have announced their plans to enter the state given the wise move taken by the government to minimize the impact of the middlemen on the entire value chain.

Listed below are some of the benefits this policy has given to the state.

  • Fixed MRP – Consumer is protected as no arbitrary pricing as is the case with the auction system.
  • Brand availability – Now brands are available as per consumer demand and not driven by contractors desire to push high margin lesser known brands.
  • Manufacturers get a better deal with the State Corporation in charge of wholesale distribution
  • No credit exposure
  • Not at the mercy of the contractors arbitrariness
  • Better price realization
  • It is an investment friendly change in policy, forward looking and pragmatic

Going forward, the government should keep up the process of reforming system while creating policies which are beneficial to the state economy and to its people.

No comments: