Madhya Pradesh Excise Department Slashes Liquor Shop Base Prices by 35% to Revive Stalled Auctions
In a bold move to address the persistent lack of bidders, the Madhya Pradesh excise department has implemented a significant 5 percent additional reduction in the base price for over 400 liquor shops across the state that remain unsold. This decision, announced on Wednesday, brings the total discount to a substantial 35 percent below the original base price established for the 2026-27 auction cycle.
Defying Cabinet Committee Directive
This price cut directly contradicts a resolution made earlier this week by the cabinet sub-committee on excise, which had firmly decided not to lower the base price beyond 30 percent of the original offset price. The committee had even explored alternative solutions, with one member proposing the formation of a state-run corporation to operate the shops, mirroring the model successfully implemented in neighboring Chhattisgarh, should private bidders continue to reject the department's pricing.
Ambitious Revenue Goals Face Major Shortfall
The state government had set an ambitious revenue target exceeding ₹19,000 crore from these liquor shop auctions, initially raising the base price by 20 percent compared to the previous fiscal year. However, current collections are already falling short by a staggering ₹3,000 crore, highlighting the severe challenges in meeting this financial objective.
Strategic Shift to Single-Shop Auctions
In a further strategic effort to attract participation, the excise department has overhauled its auction methodology. It has abandoned the previous practice of grouping multiple outlets together and has now mandated exclusive single-shop auctions. Initially, shops were bundled—for example, in Bhopal, groups of two, three, or five shops were offered collectively. Following a poor response, single-shop auctions were introduced starting from the 10th bidding round on March 31. A new departmental circular now formalizes this approach, requiring all future auctions to be conducted for individual shops only.
Extended Auction Rounds and Bhopal Focus
Typically, liquor shop auctions are completed in three rounds by the end of March, with new vendors assuming operations by April 1. This year, however, the process has extended to 15 rounds already, leaving more than 400 shops unauctioned statewide, including nine specific outlets in Bhopal. The 16th auction round, targeting shops in Bhopal district at key locations such as Habibganj crossing, Govindpura, Arera Colony, Anna Nagar, P&T Square, Prabhat Square, Berasia No. 1, Bilkhiriya, and Semra, commenced on Wednesday and is scheduled to conclude at 3 p.m. on Thursday.
Bhopal's Previous Success and Current Challenges
Bhopal, which has a total of 87 liquor shops, witnessed complete success in the 2025-26 auctions, with all shops sold for a combined total of ₹1,193 crore—an impressive 11 percent above the set target. For the 2026-27 cycle, the reserve price for Bhopal shops was initially pegged at ₹1,432 crore, representing the minimum figure the excise department aimed to secure through contracts for the upcoming year.
The department's aggressive pricing strategy and auction restructuring underscore the critical pressure to bridge the revenue gap and ensure the successful allocation of these retail licenses amid challenging market conditions.
