Among major Indian states, Telangana has emerged as the most dependent on alcohol for its tax earnings. Alcohol accounts for around 31.8 percent of the state's own-tax revenue in FY25, according to a state government revenue brief and industry analysis. Interestingly, though, despite such a high fiscal reliance on alcohol, this South Indian state recorded one of the slowest alcohol tax revenue growth rates in the country. Between FY22 and FY26, the growth rate was only 5.9 percent. This places Telangana near the bottom of national comparisons.
Telangana has reported some revenue gains recently; however, they were driven primarily by price increases and brand mix shifts. The actual volume growth, on the other hand, lagged at a meagre 1.6 percent.
The following are states with the highest alcohol share of own-tax revenue as per the rankings of FY25:
Telangana: 31.8 percent (Highest among analyzed states)
Tamil Nadu: 26.9 percent
Uttar Pradesh: 24.7 percent
Andhra Pradesh: 23.8 percent
Kerala: 22.4 percent
Karnataka: 20.4 percent
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The following are states with lower dependence on alcohol tax revenue:
Rajasthan: 18.8 percent
Haryana: 17.2 percent
Jharkhand: 12.8 percent
Maharashtra: 11.7 percent
Also Read: How Liquor Pricing Works In India: Taxes, State Pricing, And Why The Same Bottle Costs More
Andhra Pradesh, Telangana, and Kerala have seen the slowest growth in alcohol tax revenue. Between FY22 and FY26, their growth was 5.1 percent, 5.9 percent, and 7.4 percent, respectively.
The fastest-growing alcohol revenues, on the other hand, are seen in states like Maharashtra, Chhattisgarh, Odisha, Rajasthan, Uttar Pradesh (UP), Karnataka, and Tamil Nadu. Their revenues during the stipulated period grew by 24.7 percent, 21.5 percent, 20 percent, 16.1 percent, 13.6 percent, 12 percent, and 11.1 percent.
Also Read: New Tax Slabs For Low-Alcohol Beverages Announced In Keralam
Given this data, Telangana might end up over-saturating its excise model. However, if the state is planning to avoid this, it must make certain policy adjustments when it comes to pricing, brand availability, or retail expansion. Such a move is essential for Telangana to sustain state revenue growth.
