The Andhra Pradesh government has rolled out a new liquor policy, effective October 15, with an aim to bridge the growing revenue gap with Telangana and increase funds for the welfare schemes promised by chief minister Chandrababu Naidu.
By moving away from the old state-controlled liquor system, the Naidu government is hoping to stabilise income and stop the illegal alcohol trade that affected the previous system.
Officials expect this policy to bring in Rs 30,000 crore each year, with around Rs 20,000 crore anticipated for the rest of the current fiscal year.
The revenue increase is important since it will fund Naidu’s welfare programs and help the state recover financial losses from past efforts to control alcohol sales.
Since the bifurcation of Andhra Pradesh in 2014, the state has struggled to match Telangana's liquor revenues.
The shortfall has increased significantly, growing from Rs 4,186 crore between 2014 and 2019 to Rs 42,762 crore by 2024.
Officials argue that the attempts made by the previous YS Jagan Mohan Reddy's administration to reduce alcohol consumption through state control were ineffective.
The approach not only led to lost revenue but also resulted in an increase in illicit trade. An excise official mentioned that if the policies from 2014 to 2019 had continued, they could have generated an additional Rs 18,860 crore in revenue.
To address the issue of illegal liquor inflows, which have resulted in the seizure of 1.78 crore litres of alcohol in recent years, the government plans to offer affordable legal alternatives.
This includes introducing low-cost liquor priced at Rs 99 for a quarter bottle.
The initiative also involves establishing liquor malls, modelled after successful examples in Haryana, to enhance consumer access to premium brands and encourage legal purchases.
Additionally, the government is inviting major liquor brands to re-enter the market, aiming to revive legal trade and dismantle illegal supply chains.
The issuance of 3,396 liquor shop licenses through a lottery system attracted 89,882 applications, generating Rs 1,797 crore in non-refundable fees.
However, allegations of political interference emerged, suggesting that some applicants were coerced into surrendering their licenses for kickbacks.
Reports indicated that syndicates were demanding commissions of up to 30%. In response to these issues, the government mandated GPS tracking for liquor deliveries and CCTV monitoring at retail outlets to enhance transparency and deter malpractice.
Opposition to the policy has been intense, with YSR Congress Party chief Jagan Mohan Reddy criticising it as a “mafia era” that primarily benefits private distilleries.
Reddy warned that the introduction of Rs 99 liquor could result in the distribution of poor-quality alcohol, posing severe health risks to consumers.
He contrasted Naidu’s policy with his own administration’s efforts to reduce alcohol consumption through a decrease in outlet numbers and price increases, claiming that these measures were more responsible.
Reddy also condemned the government's overall management of public resources, alleging corruption in various sectors such as sand mining, gambling, and flood relief.
He questioned the transparency of flood relief expenditures, highlighting discrepancies in the reported spending on food and essentials. Reddy vowed that legal intimidation would not deter his party, asserting that the arrests and harassment of YSRCP leaders would only strengthen their resolve.
Prohibition and excise minister Kollu Ravindra dismissed allegations of syndicate involvement but assured that strict actions would be taken if any violations were found.
He emphasised women's significant participation, noting that 345 licenses were awarded to female applicants. He expressed confidence that this policy would foster a sustainable liquor trade and generate essential funds for welfare schemes.
Due to a new policy, liquidity traders have expressed concerns about reduced profit margins. They referred to Government Order 213, which initially promised a 20% margin. However, after introducing additional taxes and a 2% rehabilitation cess, the profit margin has dropped to below 10%.
“This reduction threatens the viability of operations, especially in urban centres,” warned Rayala Subba Rao, president of the AP Wine Dealers' Association. He urged the government to address what he described as a clerical oversight.
On the first day of sales under the new regime, traders faced logistical challenges, with many struggling to transition to new locations. Consumers experienced confusion as old shops were closed, and new outlets were not yet operational, leading to complaints about the unavailability of Rs 99 liquor. Some traders continued to operate temporarily from their old premises while awaiting approvals from excise authorities for permanent setups.
But the Andhra Pradesh government remains committed to its new policy.
Officials are optimistic that within the next two years, this policy will enable the state to match the liquor revenues of Telangana and Haryana.
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