Why Andhra came up with new liquor policy: Revenue gap with Telangana, funding Naidu’s welfare schemes

Between 2014 and 2019, the revenue gap between Telangana and Andhra Pradesh in terms of liquor sales was Rs 4,186 crore. In 2014, Andhra Pradesh was bifurcated and Telangana was formed. Interestingly, after the split, Chandrababu Naidu had become the CM. From 2019-24, when Y S Jagan Mohan Reddy was the CM, the state government had taken over liquor trade in an attempt to reduce liquor consumption, a move which did not yield the expected results.

However, from 2019 to 2024, the excise revenue difference between the two states went up exponentially by almost 10 fold to Rs 42,762 crore, an excise department official said. This was one of the factors Andhra Pradesh decided to formulate Excise Policy 2024-26.

The revenue generated will go into funding welfare schemes in Andhra Pradesh, a source in the government said. “With the easing of the liquor policy we are expected to match the revenue generated by states like Telangana and Haryana,” the source said.

The excise department official said, “Even if we had continued with the liquor policy of 2014-19, the state would have earned an additional Rs 18,860 crore in revenue. But the new liquor policy will make sure that we match Telangana’s revenues in the next two years.”

According to excise department officials, the state saw a decline in liquor sales because of the huge inflow of illegal liquor into the state. According to government records, over the last five years, an estimated 1.78 crore litres of illegal liquor was seized. But the amount of liquor seized was just “10% to 20% of the existing inflow of illegal liquor”, excise department officials explained.

“Moreover, as the state was selling liquor it failed to generate revenue through application and licence fees. With the new liquor policy, we have already raked in Rs 1,800 crore in application fees and Rs 2,000 crore in licence fees,” an excise official said.

Under the new policy, private retail operations have restarted with 3,736 shops notified across Andhra Pradesh. “The state has also invited different known brands to trade in the state,” excise department officials said.

The government has also decided to introduce low-cost brands — to be sold at Rs 99 per quarter of a bottle as per the policy — to prevent people from turning to adulterated liquor. For expensive brands, the state has also decided to allow liquor malls. The model, an excise official said, has been adopted by many states, including Haryana.