Thiruvananthapuram: Faced with a grim fund crunch arising from its policy of sharply cutting down on the liquor business, Kerala government today steeply increased taxes on liquor, cigarettes, water charges and fees for various services to mop up over Rs 1,500 crore.

In a major post-budget exercise of Additional Resources Mobilisation of recent times, the Cabinet hiked tax on Indian Made Foreign Liquor by 20 per cent and imposed a five per cent cess for rehabilitation of workers who lost their jobs due to closure of bars. The measure is anticipated to net Rs 1,130 crore to the exchequer.