Excise Earnings Down to Rs 12,332 Crore as Liquor Sales Fall in Maharashtra

Maharashtra's excise revenue from liquor sales has plummeted in the first half of fiscal year 2025-26, with foreign liquor volumes halving to 15.1 crore litres up to September compared to 32.19 crore litres in the same period last year, according to state excise department figures released on October 18, 2025. The sharp decline, attributed to recent price hikes and escalating living costs prompting consumer cutbacks, has slashed overall excise earnings to Rs 12,332 crore from Rs 25,467 crore year-over-year. Country liquor sales have also nosedived, dropping to 21.09 crore litres from 40.35 crore litres, underscoring a broader trend where discretionary spending on alcohol—particularly premium imports—bears the brunt of economic pressures in India's financial capital and beyond.

The downturn follows a 20-30% average price increase on foreign spirits implemented in July 2025 by the Eknath Shinde-led Mahayuti government to rationalise rates with neighbouring states like Gujarat and Goa, while boosting coffers for welfare schemes. However, senior excise officials, speaking anonymously, clarified that inflation plays a larger role, with household budgets strained by food prices up 8.5% and fuel costs rising 12% year-on-year, per the Consumer Price Index. "Liquor, especially foreign liquor, is the last priority for most people," one official noted, adding that the hikes aimed to align Maharashtra's premiums—previously 10-15% below national averages—but have backfired amid middle-class belt-tightening. Ironically, sales surged during the pandemic lockdowns of 2020-21, reaching 21 crore litres in 2019-20 from 17.93 crore in 2017-18, as home consumption spiked with bar closures. Full-year figures reflect volatility: 30 crore litres in 2024-25 versus 22.52 crore in 2022-23, highlighting how crises can paradoxically buoy vice trades.

This revenue shortfall, equivalent to a Rs 13,135 crore hit in nine months, threatens the state's Rs 3.5 lakh crore budget, where excise duties contribute 8-10% annually—second only to VAT from petroleum. Maharashtra, with over 10,000 licensed outlets and a thriving IMFL (Indian Made Foreign Liquor) market valued at Rs 50,000 crore pre-hike, now faces a 40% drop in premium segment volumes, per industry body Confederation of Indian Alcoholic Beverage Companies data. Country liquor, favoured by lower-income groups in rural Vidarbha and Marathwada, has seen a 48% slump, exacerbating fiscal gaps for programmes like the Ladki Bahin scheme offering Rs 1,500 monthly to women. Officials eye a rebound around December 31, New Year's Eve—a peak sales window generating Rs 5,000 crore historically—but warn of sustained pressure if inflation persists above 6%.

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The episode exposes vulnerabilities in sin-tax-reliant economies, with opposition Shiv Sena (UBT) and NCP (Sharad Pawar) factions slamming the hikes as "regressive", arguing they disproportionately burden the working class while failing to curb illicit trade estimated at 30% of total consumption. Social media on X buzzes with memes decrying "dry Diwali wallets", as festive gifting of bottles wanes. Excise enforcement has intensified, with 2,500 raids yielding Rs 200 crore in seizures since August, targeting bootlegging from dry Gujarat. As Diwali on October 20 approaches, symbolising prosperity yet testing purses, the government contemplates moderated hikes for 2026 to balance revenue and affordability. This slump serves as a cautionary tale for policymakers nationwide, where alcohol duties fund 5% of state GDPs, urging diversification amid economic headwinds to prevent fiscal hangovers.

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