In a major blow to Jagan Mohan Reddy’s YSRCP, the Andhra Pradesh Police SIT arrested the party’s Lok Sabha MP PV Midhun Reddy in connection with a ₹3,200-crore liquor scam on Saturday (19th July) night.
As per reports, the SIT questioned Midhun Reddy for many hours before arresting him in Vijayawada. The path for his arrest was cleared after his anticipatory bail pleas were rejected by the Andhra Pradesh High Court and the Supreme Court, with the latter rejecting the plea on Friday.
PV Midhun Reddy, who is said to be a close aide of former Andhra Pradesh CM Jagan Mohan Reddy, has been termed by the SIT as a “core conspirator” in the liquor scam that happened during the previous YSRCP regime. He is accused of influencing the officials of the Andhra Pradesh State Beverages Corporation Limited (ABPSCL).
An FIR has been lodged by the state’s Crime Investigation Department (CID) under various sections of the IPC and the Prevention of Corruption Act, at the CID office in Mangalgiri. Midhun has been named as the fourth accused (A4) in the FIR. Several other accused in the case have been arrested by the police, including Raj Kesireddy (alias Kesireddy Rajashekar Reddy), advisor to then Chief Minister YS Jagan Mohan Reddy, Krishna Mohan Reddy, former Officer on Special Duty (OSD) to the former CM (2019-2024), Dhanunjay Reddy, a former IAS officer and who was secretary to Jagan Mohan Reddy, Chevireddy Bhaskar Reddy, former MLA, and Balaji Govindappa, director of Bharati Cements.
On Saturday, the SIT filed a preliminary chargesheet of more than 300 pages in a Vijayawada court. Around 268 witnesses have been questioned by the SIT in connection with the scam so far, and ₹62 crore have been seized. 74 hard drives, a laptop and over 1000 documents have so far been seized during the investigation. A second charge sheet is likely to be filed by the SIT in the coming days.
What is the Liquor Scam
Before the 2019 Assembly elections, Jagan Mohan Reddy promised to prohibit liquor in Andhra Pradesh in a phased manner. After coming to power in October 2019, his government introduced a new liquor policy, claiming that it was in line with Jagan Mohan Reddy’s promise. Under the new policy, the government took over around 3,500 liquor shops in the state, reduced their timings and increased liquor prices. Furthermore, it handed over the entire liquor business to the state-owned APSBCL.
After the TDP-led coalition government came to power in the state, it ordered an investigation into the liquor policy rolled out by the YSRCP. The investigation conducted by the CID revealed that the liquor procurement processes were manipulated under the liquor policy in favour of certain brands, causing wrongful gains worth ₹3,200 crore and significant losses to the state exchequer. Senior YSRCP leaders, several bureaucrats and some shell companies have been named in the scam.
The investigation uncovered an intricate network of officials who allegedly bypassed the automated order for supply (OFS) systems and opted for manual processes to favour certain suppliers. Besides, the OFSs were issued to select suppliers in exchange for kickbacks. The C-Tel software, which was designed to ensure secure and automated issuance of OFS, was allegedly disabled in October 2019, which paved the way for discretionary allocation of liquor orders.
A Special Enforcement Bureau (SEB) was also set up under the Prohibition and Excise Department to put a check on the smuggling of liquor and illicit distillation. However, it proved to be ineffective as increased liquor prices led to large-scale smuggling of liquor from the neighbouring states of Telangana and Karnataka. Gradually, the APSBCL switched from digital transactions to cash transactions at all retail outlets, claiming that digital transactions were not suitable for the liquor business and that cash payments were more transparent.
Subsequently, a 5-member committee of the APSBCL was formed based on a complaint filed by a man named Yeedi Venkateswara Rao Srinivas. The committee submitted the Report on Liquor Procurement and Market Manipulation (2019-2024), claiming that the YSRCP regime was involved in “unfair discrimination” wherein it favoured certain liquor brands over others, leading to the disappearance of some brands. The report revealed that procurement systems were rigged in favour of certain brands.
In September 2024, Principal Secretary for Revenue (Excise) Mukesh Kumar Meena filed a complaint with the CID based on the report. In February 2025, an SIT was formed, headed by Vijayawada Commissioner of Police SV Raja Sekhara Babu, to investigate the corruption allegations against the YSRCP government.