The Andhra Pradesh cabinet has implemented significant changes to the state's liquor pricing policy, approving a ₹10 increase in maximum retail prices while simultaneously withdrawing additional retail excise tax on bars. The decisions were announced following a cabinet meeting chaired by Chief Minister N. Chandrababu Naidu.

Price Adjustments and Revenue Impact

State Information and Public Relations Minister K Parthasarathy clarified that the ₹10 price hike applies specifically to India-Made Foreign Liquor (IMFL) and foreign liquor bottles across all sizes. However, several categories remain exempt from this increase:

• Cheaper liquor variants (180 ml bottles priced at ₹99)
• Beer products
• Wine varieties
• Ready-to-drink (RTD) beverages

The financial implications of these policy changes are substantial:

Market Parity and Tax Restructuring

The cabinet addressed pricing disparities that existed between bars and retail outlets. "The cabinet noted that different billing prices for the same liquor products in bars and retail shops created disparities. The withdrawal of additional retail excise tax on bars aims to ensure price parity between bars and shops," Parthasarathy explained.

Additionally, the government approved an increase in retailer margins by approximately 1% of maximum retail price on IMFL, foreign liquor, beer, wine, and RTD products, including 180 ml bottles.

Microbrewery Expansion

The cabinet expanded permissions for microbrewery establishments, allowing operations in new locations:

• Within 5 km of municipal corporation limits
• In notified tourist centers
• In 3-star and above hotels, regardless of location

"This expands existing permissions within municipal corporation limits and aims to boost hospitality and tourism-driven investments," Parthasarathy noted.

Infrastructure Development Initiatives

Beyond liquor policy reforms, the cabinet approved the establishment of two significant infrastructure entities:

The Andhra Pradesh Logistics Fund will focus on mobilizing institutional capital for logistics and industrial infrastructure development. The state government will serve as the anchor sponsor, contributing between 10-20% of the total corpus, while professional management entities will oversee fund operations and governance.

The Andhra Pradesh government has undertaken to pay ₹4,497.89 crore in accumulated power sector true-up liabilities to the state's three distribution companies (DISCOMs), shielding consumers from potential electricity tariff increases. This decision follows the completion of the truing-up exercise for the fourth control period by the state electricity regulator.

APERC Completes Fourth Control Period Review

The Andhra Pradesh Electricity Regulatory Commission (APERC) issued an order on December 31, 2025, concluding the truing-up of the Retail Supply Business (RSB) for the period spanning FY 2019-20 to FY 2023-24. The regulatory body disposed of petitions filed by the state's three power distribution companies after considering public objections and submissions.

The approved net true-up amount represents a significant reduction from the DISCOMs' initial claims, which aggregated over ₹14,200 crore including carrying costs.

DISCOM-wise True-Up Allocation

The regulatory commission approved the distribution of the ₹4,497.89 crore liability across the three state DISCOMs based on their respective operational requirements:

Regulatory Scrutiny and Disallowances

APERC conducted a thorough review of the DISCOMs' claims, resulting in substantial disallowances totaling ₹8,274 crore across various expense categories. The commission rejected claims related to:

• Bill discounting expenses
• Bad debt provisions
• Short-term operational loan costs
• Transmission cost limitations
• Corrections to non-tariff income calculations

The final approved figure reflects these disallowances as well as adjustments already accounted for in earlier commission orders, ensuring regulatory compliance and cost optimization.

Government Commitment Prevents Tariff Impact

APERC noted that the Government of Andhra Pradesh, through a letter dated December 31, 2025, formally committed to paying the approved true-up amount to the DISCOMs. The commission stated this commitment was made specifically to avoid hardship to end consumers and directed the DISCOMs to recover the approved sums from the state government rather than through tariff revisions.

True-up mechanisms typically allow utilities to recover differences between projected and actual costs incurred during a control period through subsequent tariff increases. However, with the state government assuming this liability, the approved amount will not be loaded onto consumer electricity tariffs.

Regulatory Closure and Future Implications

The order effectively closes the accounts for the fourth control period and provides regulatory clarity on past cost recoveries in Andhra Pradesh's power distribution sector. While the government has not outlined a specific timeline for payment, APERC's direction establishes an explicit recovery mechanism that prioritizes consumer protection over traditional cost pass-through methods.