A massive liquor scam amounting to Rs 3,200 crore allegedly took place under the YSR Congress Party (YSRCP) government in Andhra Pradesh, according to a Special Investigation Team (SIT) probing the case. The police have pinned the scam on Kessireddy Raja Shekhar Reddy (Raj), former IT advisor to then chief minister YS Jagan Mohan Reddy.
The SIT arrested Raj a week ago, on April 21, at the Hyderabad airport. Raj and his associates, including senior YSRCP leaders and bureaucrats, are accused of misusing the state’s liquor policy to replace popular liquor brands with lesser known brands, in exchange for bribes amounting to Rs 3,200 crore.
With an elaborate plan to receive bribes worth Rs 50 to 60 crore per month, Raj and others ensured that orders were regularly placed to companies from which pre-fixed bribes were received.
Raj is not the only big name that has come up in the case.
Raj’s remand report features prominent names such as former Rajya Sabha MP Y Vijayasai Reddy, formerly a close aide of Jagan who quit his Parliament membership and also gave up politics in January.
Another big name is YSRCP MP from Rajampet PV Midhun Reddy, son of former AP minister Peddireddy Ramachandra Reddy. Both of them have already been questioned by the SIT, which has now alleged that they were part of the “liquor syndicate” that orchestrated the scam.
The SIT has also tried to implicate Jagan himself. It says that in a confession made by Raj, which he refused to sign, “he stated that YS Jagan Mohan Reddy, the then chief minister endorsed him to chalk out an excise policy by which more revenue is generated for the state,” to be used both for welfare measures and for party funds.
YSRCP, however, pointed out that Raj did not sign any confession, and alleged that those arrested in the case, like Booneti Chanakya and Sajjala Sridhar Reddy, were being coerced into making false statements.
What is this liquor policy that has landed Jagan’s former advisor in jail, and what is the scale of corruption the YSRCP leaders are accused of?
YSRCP’s liquor policy
During the 2019 Assembly election campaign, Jagan had promised to bring prohibition in the state in a phased manner. Soon after coming to power, in October 2019, the YSRCP brought in a new liquor policy, which it claimed was in line with this promise.
The government decided to take over all of the nearly 3,500 liquor shops in the state. Shop timings were shortened and liquor prices were increased to discourage consumption.
The liquor business was entirely handed over to the government-owned Andhra Pradesh State Beverages Corporation Limited (APSBCL).
The government also set up a Special Enforcement Bureau (SEB) under the Prohibition and Excise Department to curb smuggling of liquor and illicit distillation.
Over time, popular brands slowly disappeared from liquor stores, to be replaced by new, unknown brands. Liquor brands with names such as Boom and President Medal often made the rounds on social media, with amusement or dissatisfaction that only such unknown brands were available in the state.
The sharp rise in prices led to large-scale attempts to smuggle liquor from the neighbouring states of Karnataka and Telangana, leading the government to slash prices in 2021.
Meanwhile, the APSBCL also switched to cash transactions at all of its retail outlets, claiming that digital transactions were unsuitable for the liquor business, and that cash payments brought more transparency.
TDP’s allegations
This move and the state’s liquor policy in general was questioned by opposition parties, Telugu Desam Party (TDP) and Jana Sena Party.
Now Deputy CM and Jana Sena chief Pawan Kalyan had alleged that digital transactions in liquor sales were disallowed to divert funds for election expenses. TDP leaders frequently alleged that YSRCP leaders were selling cheap liquor manufactured in distilleries owned by their associates, sales records were being fudged, and digital payments were scrapped to enable corruption.
After coming to power in 2024, the TDP-led coalition government brought in its own new liquor policy. Chief Minister Chandrababu Naidu made digital payments mandatory, and announced plans to make alcohol affordable to curb liquor smuggling.
A note tabled in the Legislative Council in March 2025 said that reduced availability of legal liquor led to prevalence of illicit liquor and smuggling, causing public health concerns and losses to the state exchequer. It said that “supply chains were monopolised to favour certain brands,” while multinational corporations faced delayed payments and cancelled orders.
It also alleged that liquor supply orders were linked to extortion. Over 99% of APSBCL’s liquor sales – transactions worth nearly Rs 99,000 crore – were carried out in cash, it said.
CM Naidu called the YSRCP’s excise policy “deceptive, flawed, and inconsistent”. He vowed in the Assembly to order a Crime Investigation Department (CID) probe into irregularities in the sector under the YSRCP regime.
Where the probe stands
Based on a complaint by a man named Yeedi Venkateswara Rao Srinivas, a five-member committee of the APSBCL was formed, which submitted the Report on Liquor Procurement and Market Manipulation (2019-2024).
This committee found that under the YSRCP regime, popular liquor brands faced “unfair discrimination” in supply orders, which led to some of them nearly disappearing from the market. Instead, procurement systems were rigged to favour certain new brands that received most of the orders, the committee said.
Based on its report, Principal Secretary for Revenue (Excise) Mukesh Kumar Meena filed a complaint with the CID in September 2024.
The CID has invoked sections 409 (criminal breach of trust by public servants), 420 (cheating), 120 (B) (criminal conspiracy) of the Indian Penal Code, and certain sections of the Prevention of Corruption Act, 1988 in the case.
Incidentally, in 2023, when Naidu was jailed for his alleged involvement in the skill development scam, the CID had registered a case against him over similar allegations of misusing the liquor policy to grant liquor licenses to certain distilleries.
In February 2025, an SIT led by Vijayawada Commissioner of Police SV Raja Sekhara Babu was formed to probe the corruption allegations against the YSRCP government.
SIT’s findings
TNM examined Raj’s remand report to know what the SIT has found so far.
It alleges that then APSBCL MD and Commissioner of Beverages and Distilleries (CBD) Vasudeva Reddy, and D Satya Prasad, an assistant secretary, colluded with Vijayasai Reddy, PV Midhun Reddy, Raj, and his co-brother Avinash Reddy, to orchestrate the liquor scam. The SIT refers to them as the “liquor syndicate”.
Vijayasai Reddy and Midhun Reddy allegedly looked at previous years’ liquor sales figures and estimated that they could get monthly bribes worth Rs 50 to 60 crore.
Until then, the excise department used a software called C-Tel, which automated purchase indents and orders for supply (OFS) based on pre-decided formulas without human intervention. The SIT says that Vasudeva Reddy tweaked this to issue orders manually and a separate software was introduced to enter sales data at each government retail outlet (GRO).
From then on, Raj and his associates allegedly ensured that companies that agreed to pay bribes were favoured to receive more orders. Limits on orders given to new suppliers were lifted, and this ensured that suppliers who paid bribes were given orders as requested, according to the SIT.
The bribes ranged from Rs 150 to Rs 600 per case depending on the liquor brand. Raj would regularly receive sales data from the excise department. Within five days of sales, as soon as the distilleries were paid by the government, they would be asked to pay up the bribes. Based on the bribes received, Raj would prepare the purchase indent plan favouring those companies.
The SIT says the bribes collected were eventually handed over to Raj, who would then pass the money on to Vijayasai Reddy, Midhun Reddy and others, with the kickbacks totalling around Rs 50 to 60 crore per month, amounting to Rs 3,200 crore over four-and-and-a-half years.
Some favoured brands saw exorbitant sales, often becoming the only brands available on the market leaving customers with no other option, as the orders were controlled by Raj, the SIT says.
Sales of otherwise popular brands such as Seagram’s and McDowell's saw major decline, the SIT notes. Orders were deliberately not issued for brands such as Bagpiper Whiskey, Honey Bee Gold Brandy, Seagram's Royal Stag, and Imperial Blue whiskeys, though stocks were available, causing loss to suppliers, it says.
The APSBCL committee found that the market share of the major multinational liquor corporations including United Breweries and Pernod Ricard dropped from 53% in 2018-19 to just 5% by 2023-24.
Brands from companies such as Adan and Leela, which had sub-leased distilleries including Vishaka, PMK, and SPY, were given high supply orders in violation of existing norms, the SIT says, citing examples of Adan’s Supreme Blend Whiskey, Leela’s Brilliant Blend Whiskey, Daru House brandy, and Mansion House brandy from Tilak Nagar Distillery, “which were sold aggressively”.
Incidentally, the same Vishaka, PMK, and SPY distilleries were also named in the CID’s alleged liquor scam case from 2023 against Chandrababu Naidu.
Raj is accused of seizing control of SPY by threat and also of floating Adan distillery himself.
After Raj, Sajjala Sridhar Reddy, managing director of SPY Agro Industries, was also arrested by the SIT on April 26. He is the sixth accused in this case.
The SIT report also says that additional payments of Rs 200 crore were made by the government to companies like Adan, Leela, SPY, Tilaknagar and others, as it offered them additional discounts in violation of the established discount policy, causing loss to the state exchequer.
Police claim that the bribes were laundered through shell companies and hawala transactions, and the SIT says it is still investigating the money laundering routes.
The SIT probe also found that there were traces of methyl alcohol and ethyl alcohol in some of the liquor samples, alleging that the favoured liquor companies had endangered consumers’ health.
Former CM Jagan’s name also cropped up in the remand report. The SIT claims that Raj, in a confession statement he refused to sign, admitted that Jagan himself “endorsed” Raj to prepare an excise policy “by which more revenues are generated for the state enabling the government to use the same for welfare measures on one side and … party fund on the other side.”
YSRCP legal cell president Manohar Reddy said that since Raj did not sign the confession, it cannot be recognised in court.
Vijayasai Reddy denies knowledge of kickbacks
Vijayasai Reddy, who has distanced himself from YSRCP and Jagan since quitting politics in January, spoke to the media after appearing for SIT questioning on April 18. He admitted that he was part of two meetings in Hyderabad and Vijayawada, attended by Raj, Vasudeva Reddy, Satya Prasad, Midhun Reddy, and Sajjala Sridhar Reddy, in which they discussed liquor policy. However, he denied knowledge of any kickbacks.
Vijayasai Reddy, who is also accused in the disproportionate assets case against Jagan, said that on the request of Raj, Sridhar, and Midhun, he facilitated a Rs 100 crore loan from his son-in-law’s firm Aurobindo. Rs 60 crore of this loan went to Adan Distillery, he said.
Vijayasai Reddy’s son-in-law Sarath Chandra Reddy, non-executive director of Aurobindo Pharma, is also an accused in the Delhi liquor scam.
Businessman accused in Rs 100-crore Delhi liquor scam paid BJP Rs 55 crore via bonds
“I met Raj through the party. I didn’t know he had a criminal mindset. I admit I encouraged him unknowingly. I gave him major responsibilities within the party. I regret it now. I can’t believe he turned out to be such an evil man who cheated the party and the people,” he said.