Liquor prices likely to rise in MP:Buyers to pay ₹50 more on ₹1,300 bottle under new excise policy

Alcohol prices in Madhya Pradesh may rise soon as the state government prepares major changes in the Excise Policy 2026-27 to tackle a growing revenue crisis. The draft policy is almost ready and focuses on overhauling the liquor shop auction process, tightening tax collection, and ending the monopoly of big contractors. The move comes amid a sharp financial strain. Madhya Pradesh’s total debt has reached Rs 4.84 lakh crore, the Centre has reduced the state’s share in central taxes, and TCS (Tax Collected at Source) on liquor has been doubled from 1% to 2%. Together, these factors are likely to directly impact liquor prices. The new policy aims to increase revenue, improve transparency, and fix long-standing flaws in the excise system. The government has set a revenue target of ₹18,000 crore for 2026-27. Read the Sunday Big Story. Three main reasons behind costlier liquor 1. Central government increased TCS In the Union Budget 2026-27, the Centre doubled TCS on liquor and similar beverages from 1% to 2%. This tax is collected by sellers at the time of sale and deposited with the Income Tax Department. Liquor contractors must pay this amount in advance. The higher TCS raises their upfront cost, and officials believe this burden will eventually be passed on to consumers, pushing up retail prices. 2. Reduction in share of central taxes Madhya Pradesh’s share in central taxes has been cut from 7.86% to 7.34% for the period April 2026 to March 2031. This is expected to cause an annual loss of around Rs 7,700 crore to the state exchequer. In the current financial year itself, the revised estimate of central tax receipts has dropped to Rs 1.09 lakh crore from Rs 1.11 lakh crore, a shortfall of about Rs 2,314 crore. To fill this gap, the state is increasing its dependence on excise revenue. 3. Rising burden of freebie schemes and debt The pressure of welfare schemes and mounting debt has further strained finances. So far this year, the government has taken loans worth Rs 62,300 crore, pushing total debt beyond the size of the state budget. By the end of the financial year, debt is expected to touch Rs 4.84 lakh crore. Spending on public welfare schemes has also reached nearly Rs 60,000 crore. Main provisions of the new excise policy 1. Ending contractors’ monopoly A key goal of the new policy is to break the monopoly of a few large contractors. In recent years, serious complaints emerged from several districts. 2. Administrative reforms and transparency The policy also focuses on preventing fraud and improving transparency. Policy drafting and approval process Before finalising the draft, Excise Commissioner Abhijeet Agarwal held multiple meetings with contractors, bar operators, and department officials. The draft will now go to the Cabinet after in-principle approval from the Chief Minister. No liquor shops at holy sites Even while pushing for higher revenue, the government has tried to maintain social balance.