State eyes 12 % hike in excise revenue target

Created On: 3 March 2026 12:30 PM IST

State eyes 12 % hike in excise revenue target

Bengaluru: Ina bid to mobilise financial resources for the state’s five flagship guarantee schemes, the Karnataka government is intensifying efforts to boost revenue collection. As part of this strategy, the government is considering increasing the excise department’s revenue target by 10 per cent, a move that is likely to result in a fresh hike in liquor prices after the budget session.

The state government is spending nearly ₹59,000 crore annually on its free guarantee schemes, placing significant pressure on the exchequer. To sustain these commitments, the government has been relying heavily on key revenue-generating departments such as excise, revenue and transport. Among them, the excise department remains one of the largest contributors to the state’s income, with liquor price revisions being a recurring method to enhance collections.

Over the years, the excise revenue target has steadily increased, accompanied by periodic hikes in liquor prices. However, rising prices have significantly impacted the consumption patterns of low- and middle-income groups, who predominantly consume lower-priced liquor. The price surge has also led to a decline in overall sales, pushing parts of the liquor industry into distress.

For the financial year 2025–26, the excise department was initially given a revenue target of ₹40,000 crore, which was later revised upward by an additional ₹3,000 crore. So far, the department has achieved 77.61 per cent of its target, collecting ₹33,371 crore. In comparison, revenue collection stood at ₹29,460 crore by January-end in 2024–25. This indicates an additional revenue generation of ₹3,910 crore in 2025–26 compared to the previous fiscal. The rise in revenue has largely been driven by higher Additional Excise Duty (AED) on Indian Made Liquor (IML) and beer. However, despite higher collections, sales volumes have declined. IML sales have dropped by 4.02 per cent, while beer sales have seen a sharp decline of 54.92 per cent.

Despite the downturn in sales, the excise department has proposed a 10 per cent increase in its revenue target for 2026–27, which could mean an additional ₹4,300 crore target. Reports suggest that the government is likely to increase prices particularly in the lower slabs, as cheaper liquor accounts for nearly 75 per cent of excise revenue. The price revision is expected after the budget session to avoid immediate political backlash.