For successive ruling parties in Tamil Nadu, the TASMAC, a government body that runs liquor shops has not been just a cash cow for the exchequer but also a political war chest that allegedly funds electoral operations and party expenses.
Among those detained were former Telangana Governor Tamilisai Soundararajan and Coimbatore South MLA Vanathi Srinivasan. The police blocked the BJP workers from marching to the TASMAC headquarters in Egmore, leading to chaos across Chennai.
While the BJP has framed the case as “proof of DMK’s corruption”, the larger battle is seemingly political as the fresh wave of accusations has come at a time when the ruling party has been at loggerheads with the Centre over “Hindi imposition” through the National Education Policy (NEP) and the proposed delimitation.
For the DMK, the arrests are part of a long fight with the BJP-led Centre against “targeted attacks” on its leaders. A senior DMK leader told The Indian Express that the BJP had used central agencies for “disruption and coercion” before, referring to the Enforcement Directorate’s (ED) arrest of state minister Senthil Balaji last year in a money laundering probe.
What is TASMAC and is it connected to political parties?
TASMAC was established in 1983 under then Chief Minister M G Ramachandran who intended to regulate liquor sales and eliminate the hazards of illicit liquor. What began as a government initiative to provide “cheap and good quality liquor” soon became a sprawling state-controlled monopoly, generating staggering revenues for the government.
At present, TASMAC operates about 7,000 retail outlets and handles the supply of about 3 lakh or more bottles in varying quantities. The licensed distilleries supplying liquor are owned by politically connected individuals from both the ruling and Opposition parties. While liquor is legally sold through TASMAC’s official channels, a parallel, unaccounted trade also thrives under its umbrella.
What is the ED investigating?
The roots of the current controversy lie in the ED’s investigation into alleged financial irregularities in TASMAC.
The agency announced on March 13 that multiple FIRs had been registered in the case under the Prevention of Corruption Act, 1988, citing bribery in liquor tenders, transfer-posting scams, and retail overpricing.
A week earlier, the ED’s search operations reportedly unearthed key evidence of manipulation in transport and bar licence tenders. The agency claimed to have found instances where tenders were awarded despite only a single applicant participating, raising concerns about cronyism in awarding contracts.
Furthermore, the probe implicated major distilleries such as SNJ, Kals, Accord, SAIFL, and Shiva Distillery and bottling companies such as Devi Bottles and Crystal Bottles. Investigators claim these companies systematically inflated expenses and used fake invoices to illegally generate more than Rs 1,000 crore that was funnelled back as bribes to ensure favourable policies and continued contracts with TASMAC.
The alleged corruption in the TASMAC is said to be two-fold: first, through an unaccounted billing system, and second, through direct overpricing at retail shops. Every bottle sold at a TASMAC outlet is allegedly charged an additional Rs 10 to Rs 50 over the Maximum Retail Price (MRP), an illegal surcharge that, when multiplied across lakhs of daily transactions, generates hundreds of crores in untraceable cash every year.
Investigations have also pointed to systematic favouritism in procurement, where liquor supply contracts are awarded to politically favoured distilleries, pushing out nationally reputed brands in favour of local manufacturers with questionable quality standards.
An ED source said TASMAC shops serve as fronts for a shadow trade in liquor that does not officially enter the government’s supply chain, “allowing the government-run monopoly to operate with dual pricing mechanisms, one for the official books and another for the vast, unchecked black-market trade”. For successive ruling parties in the state, TASMAC has not been just a cash cow for the exchequer but also a political war chest that allegedly funds electoral operations and party expenses.
Why has the long-simmering issue surfaced now?
While the BJP has seized on the alleged scam, a senior ED official said the latest case was a consolidation of existing vigilance and criminal cases, many of which date back to the AIADMK’s tenure.
According to the officer, of the 41 cases compiled under the broader TASMAC corruption umbrella, 34 originated during the AIADMK regime, with only seven linked to DMK rule.
This has not stopped Annamalai from launching an all-out attack on only the ruling party. Last week, the BJP leader alleged that Balaji was the “kingpin” behind corruption in Tamil Nadu’s liquor industry. He likened the TASMAC scam to the alleged Delhi liquor policy case in which the Aam Aadmi Party (AAP) found itself entangled in an ED investigation.
His comments were met with immediate pushback from the DMK, with Balaji asserting that all purchases and supply orders in TASMAC are based on transparent procurement calculations. The minister also accused the BJP of deliberately inflating the corruption narrative for political mileage.
Is there a larger political battle?
The timing of the BJP’s renewed attack on DMK is amid a larger struggle between the two parties over Tamil Nadu’s autonomy. Over the past month, Stalin’s government has rallied the state’s political spectrum, including the AIADMK, against the Centre’s push to impose Hindi and proposed delimitation, a move that many in Tamil Nadu see as reducing the state’s influence in national politics.
The BJP, in turn, appears to be shifting focus toward corruption as a pressure tactic, a method that proved successful in bringing down Opposition governments elsewhere. The DMK, however, has already weathered multiple attacks, including the arrest and jailing of Balaji for almost a year.
A senior DMK leader said such cases were meant to “disrupt”.
“T T V Dhinakaran was arrested in 2017 in a bribery case by the Delhi Police and sent to Tihar Jail. Where did that lead? The Income Tax Department raided over 150 properties linked to Sasikala’s family. What happened? Nothing. These were tactics used for political gain. Dhinakaran and the Sasikala family landed up in NDA finally,” the leader said.
For now, the DMK remains defiant, but the coming months could determine whether the BJP’s strategy of using corruption allegations can successfully erode the ruling party’s dominance or if the DMK can hold its ground amid yet another high-stakes battle with the Centre.