Hyderabad: The ongoing investigation into an alleged Rs 3,500-crore liquor scam by the Crime Investigation Department (CID) in Andhra Pradesh has taken a dramatic turn, with retired Indian Administrative Service (IAS) officer Rajat Bhargava squarely laying the blame at the door of then chief minister Y. S. Jagan Mohan Reddy.
Bhargava, the then special chief secretary of revenue and excise, and director of the Andhra Pradesh State Beverages Corporation Limited (APSBCL) from May 2020 to June 2024, claimed that Jagan Reddy systematically manipulated liquor prices to generate massive kickbacks to favoured distilleries.
What makes the development alarming for the YSR Congress Party (YSRCP) founder Y. S. Jagan Mohan Reddy and his party cadres is the seriousness of the disclosure. Bhargava testified before the 3rd Additional Civil Judge in Vijayawada, and his testimony was recorded on 29 September under Section 164 of the Criminal Procedure Code (corresponding to Section 183 of the Bharatiya Nagarik Suraksha Sanhita).
Senior members of Andhra Pradesh’s judiciary, who spoke to ThePrint, said these statements are likely to be substantive evidence and cannot be easily retracted without facing perjury charges.
The CID’s investigation into the multi-crore Andhra Pradesh liquor scam has expanded significantly from its preliminary charge sheet in July 2025, revealing a network that spans political insiders, corporate entities, high-ranking bureaucrats, and extensive money-laundering systems.
In its 305-page preliminary charge sheet in the Anti-Corruption Bureau (ACB) Special Court in Vijayawada, the CID said an alleged Rs 3,500 crore- to Rs 4,000-crore liquor scam unfolded from 2019 to 2024 during Jagan Reddy’s regime. A copy of this charge sheet is with ThePrint.
As part of this ongoing investigation, Bhargava’s recorded statements also point to an allegedly meticulously coordinated operation run by key officials in the Chief Minister’s Office, including K. Dhanunjaya Reddy, Praveen Prakash, and Officer on Special Duty (OSD) P. Krishna Mohan Reddy. According to Bhargava, the memos he sent to Dhanunjaya Reddy and Krishna Mohan Reddy were struck down by the CMO, as were other objections he raised against arbitrary hikes in liquor base prices.
The July 2025 charge sheet by the CID primarily targeted a network of 48 individuals and entities. However, subsequent supplementary charge sheets filed in the Anti-Corruption Bureau (ACB) Special Court expanded the net to include elite officials and political handlers.
As part of this, the Andhra Pradesh CID also questioned the former special chief secretary in Vijayawada on Tuesday, and on Wednesday, the testimony was recorded before the magistrate. In his statement to the CID, Bhargava also stated how the checks and balances usually implemented by an officer were undermined and that he was allegedly met with direct warnings from the CMO.
Bhargava was reportedly questioned him about several aspects of the liquor policy, including its formulation and implementation, approval of liquor brands, the order-for-sale process, alleged intervention by private individuals in Excise Department affairs, and irregularities in procurement.
Bhargava’s confession to the CID not only officially links the liquor scam directly to the CMO but also arms the current Telugu Desam Party-led (TDP) National Democratic Alliance (NDA) government in Andhra Pradesh.
It is under the same CrPC Section 164 confessions that current Chief Minister N. Chandrababu Naidu was arrested and jailed in September 2023 for his alleged involvement in the Skill Development scam.
A statement recorded under Section 164 of the CrPC is worth its weight in gold legally, because a magistrate verifies that the confession or disclosure is entirely voluntary. Thus, the statement becomes a permanent, admissible judicial record.
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For the prosecution, this acts as a vital shot in the arm because the witness cannot turn hostile despite political pressure. In this liquor case, a senior lawyer explained that if Bhargava attempts to change his narrative during the formal trial, he faces the immediate and severe prospect of a perjury prosecution.
Responding to Bhargava’s confession before the magistrate, the YSRCP said that Naidu and his son Nara Lokesh were manufacturing new stories in the liquor case to divert attention from the District Selection Committee (DSC) scam.
Former legislator TJR Sudhakar Babu said, “The SIT is conducting a targeted investigation under Chandrababu and Lokesh’s direction, harassing YSRCP leaders, officials, and their families through late-night calls and pressuring witnesses to give predetermined statements.”
What is the liquor scam about?
When the previous YSRCP government took over in 2019, it introduced a revamped excise strategy aimed at phasing out private operators and aggressively regulating retail trade. Much like Jagan Reddy’s nine welfare policies, this policy too was officially marketed as social reform.
In fact, in his 2019 election manifesto, Jagan mentioned that he would introduce a law to make Andhra liquor-free like Bihar and Gujarat.
However, this multi-crore Andhra Pradesh liquor scam that was initially pitched as a “people-friendly” welfare intervention to curb alcohol consumption soon turned into a masterstroke to monopolise retail operations of liquor, the CID charge sheet said.
“Behind this façade of public accountability lay a structure carefully engineered to centralise absolute control. The ultimate masterstroke of the scheme was the complete monopolisation of retail operations. By shutting down private liquor shops and routing every drop of retail transaction through a single state-owned corporation—the Andhra Pradesh State Beverages Corporation Limited (APSBCL)—the architects of the policy created a captive marketplace. On paper, this was done to control illicit sales, but in reality, it concentrated unchecked discretionary power directly into the hands of a tightly knit syndicate,” the CID report said, outlining how the scam unfolded.
Investigators said that the pre-existing end-to-end digital tracking system, which recorded procurement and sales, was intentionally dismantled and replaced with a heavily restricted manual ‘Order for Supply (OFS)’ regime. With digital oversight turned off, regular beer and whisky brands marketed in other states were replaced by brands that were favoured by the YSRCP policy.
“Established national brands were systematically choked out of the state market, replaced instead by obscure, sub-standard products manufactured by preferred local distilleries. The unknown brands offered higher discounts to the interested parties,” the report revealed.
This closed-loop system turned the state’s retail network into a lucrative black-money machine, the chargesheet revealed. The Special Investigation Team (SIT) and Enforcement Directorate (ED) have traced a staggering money trail exceeding Rs 1,000 crore in suspected kickbacks.
According to the CID, distilleries wanting shelf space were allegedly forced to pay hefty upfront bribes, which were later recovered by inflating raw material costs and manipulating transport tenders.
In its observations, it said, “With nearly 99 per cent of the multi-billion rupee retail transactions handled strictly in cash, billions of rupees effectively disappeared from the state exchequer, leaving behind a complex network of shell corporations, cash transactions, and a massive institutional scandal.”
(Edited by Nardeep Singh Dahiya)