 "AAP govt's Delhi excise policy caused Rs 2,000 crore loss: CAG report")
A Comptroller and Auditor General (CAG) report, tabled in the Delhi Assembly on Tuesday, has faulted the excise policy introduced by the previous Aam Aadmi Party (AAP) government in 2021 to have caused cumulative losses worth over ~2,000 crore to the Delhi government.
The CAG’s “Performance Audit on Regulation and Supply of Liquor in Delhi” is first of the 14 CAG reports that the Rekha Gupta-led Bharatiya Janata Party (BJP) government has promised to table in the Delhi Assembly.
The alleged “liquor scam” and the “overspending” on the chief ministerial bungalow were two of the key issues that the BJP and Congress had flagged against the previous AAP government. The alleged irregularities in the formulation and implementation of the excise policy had led to Lieutenant Governor V K Saxena recommending a CBI probe in July 2022. Top leaders of AAP, including Arvind Kejriwal, Manish Sisodia and Sanjay Singh, have spent months in jail after probe agencies arrested them in the case.
The report has pointed out several infirmities in the excise policy that the AAP government introduced in November 2021 and withdrew in September 2022. It has said that the lapses in the functioning of the Excise Department caused losses exceeding ~2,026.91 crore, including ~2,002.68 crore loss of excise revenue.
The report has stated that retail liquor licences were given without proper checks. The then Deputy Chief Minister Sisodia-headed Group of Ministers (GoM) overruled the expert committee on excise policy’s recommendation that wholesale should be handled by government agencies, instead recommending that private entities should take care of wholesale, the report has pointed out.
The report has said that the excise policy created risks of monopolies and brand-pushing by an “exclusive arrangement” between a few wholesalers and manufactures, allowing the distributors to dominate the liquor supply chain with just three of them controlling over 71 per cent of total liquor supply chain in the city.
It pointed out that out of 367 registered IMFL (Indian-made foreign liquor) brands, 25 accounted for nearly 70 per cent of total liquor sales in Delhi. It said that the top 10 brands accounted for 46.46 per cent of liquor sales in Delhi, whereas the top 25 brands accounted for 69.50 per cent of the liquor sold.
The report has said that wholesale licences for supply of IMFL and FL (foreign liquor) were granted to 14 business entities, whereas the same were granted to 77 manufacturers of IMFL and 24 suppliers of FL in the old policy (2020-21). “Similarly, for the purpose of retail vends, Delhi was divided into 32 zones (containing 849 vends) whose licences were granted to 22 entities through tendering, whereas 377 retail vends were run by four government corporations and 262 retail vends were allotted to private individuals previously,” the report said.
According to the CAG report, the Sisodia-headed GoM had mentioned in its report that the entire liquor retail market was apparently controlled by very few people through a fraudulent proxy model. However, it still recommended distribution of retail licences in zones where one entity/person could get up to 54 vends (two zones).
The report said the Master Plan Delhi-2021 prohibited opening of liquor vends in non-conforming areas, but the Excise Policy 2021-22 mandated opening at least two retail vends in each ward.
The Excise Department is a major contributor to the Delhi government’s tax revenue, contributing approximately 14 per cent of its total tax revenue.