In view of the short supply of molasses, to protect its revenue, the government has reserved 30 per cent of the total molasses produced across the state for country liquor. From now, of the total molasses produced by each sugar mill, 30 per cent will be reserved for country liquor.

The government has also decided to reduce the supply of molasses by 10 per cent to the chemical industry in Uttarakhand. As per the agreement signed between the two state governments in 2006-07, UP was to supply 35 lakh quintals of molasses to Uttarakhand for three years.

The sale of country liquor in the state accounts for nearly 50 per cent of the total revenue of the Excise department. In 2008-09, country liquor is estimated to contribute as much as Rs 2,400 crore of the total revenue (Rs 4,600 crore) of the Excise department.

The Uttar Pradesh Distillers Association has also indicated that they will loose at least 35 per cent production of ethanol during the current season due to the short supply of molasses.