Delhi liquor policy led to loss of Rs 2,027 cr: CAG

A report by the Comptroller and Auditor General (CAG) has observed several irregularities in Delhi’s now-scrapped liquor policy and its implementation, resulting in an estimated revenue loss of Rs 2,027 crore to the exchequer, states media reports. ED and CBI in their probe earlier had alleged payoffs of Rs 1,000 crore.

The policy, introduced in November 2021, was pitched as a game-changer for Delhi’s liquor retail market, aiming at increasing revenue and simplifying liquor trade. However, the CAG report suggests that the policy failed to meet its objectives.

The report sheds light on glaring lapses, from award of licenses to wholesalers to appointing retailers and lack of monitoring and distribution of liquors. CAG found that bidders, regardless of complaints or poor financial standing, were allowed to participate in the tendering process. Even entities that reported financial losses were granted licences or had their existing ones renewed.

The report further highlights the pricing of liquor left at the discretion of manufacturer and wholesalers. “This discretion allowed L1 licensee (manufacturer and wholesaler) to manipulate prices of liquor to its own advantage,” the CAG said. This led to decline in sales and loss to exchequer. There was no quality control monitoring either in the liquor sold.

Instead of end-to-end tracking for liquor sale through bar code scanning, the excise department went for post-sale stock reconciliation, undermining inventory tracking and data accuracy.

“There was revenue loss of Rs 890 crore to the government as it did not re-tender the surrendered retail licences,” the report said, in addition to the loss of Rs 941 crore due to exemptions given to zonal licensees.

The federal auditor said that the AAP government overruled the excise department to give waiver of licence fees of Rs 144 crore to zonal licencees on the basis of Covid restrictions (December 28, 2021 to January 27, 2022). A further Rs 27 crore loss was on account of incorrect collection of security deposits from zonal licensees, it said. “These implementation issues of the new policy led to a loss of revenue of approximately Rs 2,002 crore,” the auditor said.

Blaming the AAP-led government and its top functionaries in ignoring the Cabinet in formulating the new excise policy, CAG added that “Necessary permissions from the Cabinet/opinion of LG were not obtained before giving important exemptions/relaxations having revenue implications (in new excise policy for 2021-22).”

CAG further pointed out that the key recommendations from an expert panel were ignored by the Group of Ministers (GoM) led by then-Deputy Chief Minister Manish Sisodia. These recommendations included grant of wholesale license to private entities instead of state owned wholesale entity, upfront charging of excise duty in the license fees in place of excise duty to be charged per bottle, applicant being allowed to get a maximum of 54 retail vends in place of an individual being allotted a maximum of two vends.