Liquor prices in Andhra Pradesh are expected to increase soon as the state government adjusts its policies to make up for revenue losses from the rise of private liquor shops. In an effort to address the financial strain on liquor shop owners, the government is planning to raise the commission dealers earn.
In the 2023-24 fiscal year, liquor sales generated about Rs 36,000 crore for the state, but after covering distillery payments and employee salaries, the government kept around Rs 28,000-30,000 crore. However, the introduction of over 3,000 private liquor shops in October 2024 led to a sharp drop in state revenue. The Finance Department had warned that this could harm earnings, but the government proceeded with the policy.
Initially, private liquor shops were promised a 20% commission, which encouraged many to get involved. But shop owners soon complained that the profits weren’t enough and that political influence was affecting their business. In December 2024, they threatened to stop selling liquor unless their commissions were increased.
The excise department responded by proposing a commission increase, which was reportedly approved in a recent cabinet meeting. However, an official announcement has been delayed due to election regulations. Despite rumors of lower liquor prices, only two brands—one brandy and one whiskey—saw a small price decrease.
Under the previous administration, liquor prices surged, especially for lower-quality brands, with an 80-100% increase compared to 2019. The revenue from these sales was used for welfare programs, which led to criticism that the government was relying on liquor sales to fund populist projects.
Now, with the proposed increase in commissions to 14.5%, liquor prices are expected to rise. The excise department has suggested several pricing models to make up for lost revenue. One proposal suggests a Rs 10 price hike for liquor brands priced above Rs 150, which could result in a Rs 135 crore revenue loss. Another model could bring in Rs 320 crore with a Rs 10 increase. A third model suggests a two-tier margin system, potentially gaining Rs 220 crore.
While the government is still considering these options, the opposition is likely to challenge the decision, especially since there were recent reports of a possible price cut. The expected price increase will affect both shop owners and consumers.
