The sequel is chronologically set two years after the original film, Sarkar.
The movie opens with an assassination attempt against Shankar Nagre (Abhishek Bachchan) being busted by his lieutenant Chander (Ravi Kale). It was planned by Deputy Chief Minister of Mahareashtra Karunesh Kaanga (Sayaji Shinde) and Hassan Qazi (Govind Namdeo).
Anita Rajan (Aishwarya Rai Bachchan), CEO of an international electrical power firm based in London, holds a meeting with Mike Rajan (Victor Banerjee), her father and boss and Qazi, as a seemingly shady adviser and facilitator; regarding an ambitious proposal to set up a multi-million dollar power plant in rural parts of the state of Maharashtra in India. Qazi states that this project will be impossible due to possible political entanglements. When Anita asks him for a solution, Qazi states that enlisting the support of Subhash Nagre (Amitabh Bachchan)(commonly referred to by his title of Sarkar), who he describes as a criminal in the garb of a popular and influential political leader, might help their cause.
Sarkar is shown greeting a massive crowd from the balcony of his palatial bungalow in Mumbai, Maharashtra. They have gathered to celebrate his 60th birthday. He addresses the crowd and states that he is proud of what his son, Shankar, has achieved as the heir of the Nagre clan. He then goes down to mingle with the rejoicing crowd.
Anita is accompanied by the Chief Minister of Maharastra, Kaanga, and Qazi to the Nagres's residence. They put forward the power plant proposal to Subhash and Shankar. Subhash angrily rebukes the CM, who had been brought to power thanks to Sarkar's influence; for agreeing to sponsor the power plant as the project involved resettlement of around 40,000 people from five villages surrounding the major rural vote bank of Thakerwadi. The CM apologizes and promises that something like this won't happen again.
After this failed meeting gets over, the dejected Anita tells Qazi that she doesn't think things will work out in this 'jungle-like' political scenario. Qazi however reassures her by saying that there is still some hope left as Shankar had not said a word during the meeting.
Shankar is trying to convince his father about the benefits of the plant and the tremendous progress it can spark in the power-hungry state of Maharashtra. He states that one should overlook a small loss in the present if there is a promise of a greater gain in the future. After some convincing, Subhash somewhat reluctantly agrees to support the project.
Anita and Shankar have a meeting, in which Qazi tries to bribe Shankar to let him embezzle money from the project; when Anita goes to attend a phone call from her father. However, the righteous Shankar informs Anita about the corrupt Qazi's plans. She later fires him.
Father and son proceed to Thakerwadi, accompanied by Shankar's wife Avantika (Tanisha Mukherjee), their trusted lieutenant Chander (Ravi Kale) and bodyguards. They have gone to meet Rao Saab, Sarkar's wise mentor and a popular leader in the interns of Maharashtra; to seek blessings and advice for the project. He is initially reluctant about the idea and Shankar vehemently opposes his stance. However, he agrees to give his go-ahead to the project after Shankar convinces him that Sarkar believes in the project, although it is apparent that neither Rao Saab nor Subhash himself is entirely convinced.
During the meeting, Rao Saab's nephew, Sanjay Somji (debutante Rajesh Shringarpore) storms in to complain about a matter and proposes a violent solution. Rao Saab promises to look into the matter and introduces him to the Nagres as a leader in the local farmers' union. He describes him as a short-tempered albeit good-natured man.
Shankar, along with Anita, visits the villages to mobilize support from the masses. During this campaign, Anita starts to admire Shankar and they share many deep conversations. Shankar states that the power plant has become as much of a dream for him as it is for Anita, who relishes this opportunity as an opportunity to work independently from the constraints of her boss and estranged father. However, they face an obstacle in the form of Somji, who incites the people against the Nagres, calling them money-minded city-dwellers who don't care about the welfare of the rural public and are just out to grab tracts of their motherland. The fickle public react by protesting violently.
Kantilal Vora (Upendra Limaye), a businessman, approaches Sarkar with the proposal of shifting the project to the state of Gujarat, as the project was seemingly facing a dead end in Maharashtra. After his idea is unceremoniously rejected by the Nagres, he joins hands with Qazi and Kaanga (who is unhappy with Sarkar for making him deputy CM instead of CM) to make a plot against the Nagres.
Subhash mourns over the death of Vishnu (played by Kay Kay Menon in Sarkar), his erring son who was killed by Shankar in the prequel for a murder attempt on his father. Later, Subhash tells his son that Kantilal Vora had come, in a manner that hints that he is a threat to their cause, but the seemingly overconfident Shankar erroneously brushes the matter aside and tells his father not to worry about anything as he would take care of whatever comes up.
Meanwhile Chander approaches Shankar with the idea of intimidating Somji, who is proving quite problematic. However, Shankar declares that he wishes to hold talks with Somji as he believes that both work for the benefit of Maharashtra and that Somji is merely uninformed about the project. He orders the bewildered and dismayed Chander to arrange for a meeting. With some difficulty, he succeeds in arranging a cell phone conversation just when Shankar is about to enter his waiting car. As he is standing in front of his car talking to Somji, the vehicle explodes. Avantika, who was two months pregnant and was sitting inside the car waiting for Shankar, dies. Subhash, who rushes to the balcony on hearing the explosion, gets a heart attack on witnessing the scene.
Shankar, Anita and Pushpa (Supriya Pathak), Shankar?s mother, visit Subhash in the hospital. Here, Subhash consoles Shankar and tells him to keep going with the project.
Shankar fires Chander over the security breach that resulted in the explosion, without giving him a chance to prove himself. He appoints a deputy, Bala, as the new security in-charge.
Unknown assailants kidnap Somji as he is on his way to a rally. Media speculation and general opinion point to the Nagres as the culprits. As Subhash watches the news with Kaanga, he notices by Kaanga?s speech and behavior that he could possibly be a perpetrator.
Shankar attends a party hosted by Anita for those involved in the project. Here, Mike tells Anita that he is giving the project to the business-minded Vora, as he is fed up of the problems faced by it in Maharashtra and also of Shankar?s idealistic approach to them. When Anita tells him that this would be wrong, as their promises to the rural public of Maharashtra would be broken; Mike remarks that she shouldn?t be moralistic and should think of profits. Anita replies that Shankar would not allow this, to which Mike ominously retorts that Shankar would be ?taken care of?, thus arousing Anita?s suspicions. Her father then introduces her to Vora.
Meanwhile at the party, Shankar receives a phone call from Chander, who in an attempt to redeem himself, has found out that Somji is being held captive by Qazi in a house in a forested region. Shankar, along with Bala, rushes to the spot in a jeep and picks up Chander, who leads them to the secluded hideout. They wish to settle scores with Qazi and free Somji so as to shatter kidnapping allegations against them. Shankar purposely crashes the jeep into an electrical generator. This causes a forest fire, and all the guards rush outside and make efforts to stop it. Hence they become easy and unsuspecting game for Shankar?s spade and Chander and Bala?s borrowed rifles. Shankar enters the house and shoots down Qazi, as he is about to escape. A terrified Somji is also freed.
The indebted Somji becomes an aide to the Nagres. Rao Saab calls Shankar and thanks him for bringing a positive change in his nephew, something he himself could not do. Meanwhile, Kaanga and Vora hire an assassin, apparently to kill Shankar. Shankar and Somji hold a joint press conference where they announce their alliance. Somji says that he is now a supporter of the project, a statement that brings some ire from one of the apparent supporters of his previous stance, who is present at the conference. The assassin is also present there.
Anita and Shankar are having a conversation over tea at a secluded balcony. Anita tells him that the project is being taken to Gujarat, to which he replies that only efforts are being made to take it there, and he won?t let that happen. He says that the two main threats, Qazi and Somji, have been taken care of, and now the going will be a lot smoother. Anita relays Mike?s statement that he would ?take care of? Shankar. But Shankar says that she is having irrational fears because she loves him. The two face a few uneasy moments followed by which they hold hands (It may be noted that the love in the Shankar-Avantika marriage was somewhat one-sided). But Shankar is then shot multiple times and a screaming and sobbing Anita is left behind.
Subhash, Pushpa and Chander come to visit Shankar at the hospital. The doctor informs them that Shankar is very likely to die. Pushpa collapses on hearing this. Sarkar enters the ward where a fatally wounded Shankar and a sobbing Anita are present. He tries to give Shankar strength for whatever bleak chances of survival he has. Anita then starts crying uncontrollably and Shankar passes away.
Subhash sets out on a path of bloody revenge. He asks Anita who was present with her dad at the party, and on being told that it was Vora, instructs Bala to abduct him. Vora is tortured at the Nagre?s mansion for information about the others involved, and presumably killed later. Kaanga is knifed at his office while Bala bludgeons the assassin to death with a rifle?s butt. Chander is also shown as one of the traitors. He says that he had been loyal to Subhash for twenty years as he respected him and his way of functioning, but could not digest the way Shankar worked as the Sarkar. He was also angry that Shankar had fired him and chosen to trust a rookie (Bala). Bala shoots him in the head.
Subhash goes up to Anita and informs her that her dad had been shot dead by his men in London. She sheds a stray tear (it should be noted that she and her father were estranged and had never really been close, and hence the lack of sorrow on her part) as Subhash tells her about the conspiracy to kill Shankar. Vora wanted to handle the profitable venture himself, while Qazi wanted to embezzle a few crores from the multi-million dollar project. Both realized that Shankar?s presence would not allow them to do what they wanted and hence bumped him off. Kaanga meanwhile wanted to overthrow the ruling party so that he could enjoy the powers of being the Chief Minister of Maharashtra, but realized that the support given by the Nagres to the ruling party would prevent him from doing so. Killing Shankar was probably intended to weaken the Nagres? hold over Maharashtrian politics. Meanwhile, Chander thought he would succeed Subhash as the next Sarkar but the unexpected arrival of Shankar on the scene (in the first movie Sarkar) dismayed him. He was the one who informed the assassin about Shankar?s location.
However, Subhash then states that he has discovered that this whole setup was actually a cover-up for an elaborate and dirty political conspiracy in which Qazi, Kaanga, Vora, Chander, Mike and the killer were merely pawns. When Anita asks him who the mastermind behind it was, Subhash unexpectedly replies that it was Rao Saab. The conspiracy was to make Somji the new ?Sarkar?. He was the one who instructed the trio of Qazi, Kaanga and Vora about everything. The bomb that was planted in Shankar?s car was merely a distraction and was not meant to kill Shankar, as would have been thought (as Shankar would have been in the car had it not been for Somji?s phone call). Shankar was not bumped off at this stage because then the public perceived Somji and him to be enemies, and Shankar?s death would arouse his supporters suspicion against Somji and make them turn against him, thus defeating the entire purpose of the conspiracy. To achieve this end, Rao Saab orchestrated Somji?s kidnapping and sacrificed Qazi. Hence when Shankar saved Somji and Somji joined the Nagres? campaign, the public perceived him to be a younger brother to Shankar. Thus when Shankar would be killed, the public would automatically consider his ?brother? Somji to be his successor. On hearing about the complete conspiracy, a stunned Anita asks Subhash what would happen next. Subhash replies that Rao Saab would be coming to his residence the next day. The next day as Rao Saab arrives, he sits down with Subhash and shows feigned grief over Shankar?s death. He then asks Subhash who would be able to take on Shankar?s mantle. Subhash points behind Rao Saab, who turns to see the bloody corpse of his nephew Somji and is visibly terrified as to what Subhash would do to him now that his plot has been uncovered. What finally happens to Rao Saab is not shown.
Subhash is shown lamenting that his son had to pay the price of his actions. He goes and sits on his son?s desk, symbolizing that he has reclaimed the title of ?Sarkar? himself after Shankar?s death. He calls out to his wife Pushpa and tells her to call his daughter-in-law Amrita (the wife of Vishnu Nagre, played by Rukhsar in the prequel Sarkar) and tell her to send his grandson Chiku from the city of Nagpur to their house in Mumbai. This is probably to feature his training as a successor in a sequel. In the closing shots of the movie, Anita is shown at the Nagres? residence doing some paperwork (most probably related to the power plant project). She casually and comfortably asks for a cup of tea, showing that she has integrated well into the Nagre family and that she is now an aide to Subhash.