New Delhi: The Bharatiya Janata Party (BJP) government in Delhi tabled the Comptroller and Auditor General (CAG) report on the alleged irregularities in liquor policy on the second day of the eighth Delhi Assembly on Tuesday. The report said that the government suffered losses of over Rs 2,000 crore because of the liquor policy.
The report highlighted several steps that led to losses of varying amounts. These included the failure to open retail shops in non-conforming wards, resulting in a loss of Rs 941.53 crore, not re-tendering surrendered licenses, leading to a loss of Rs 890 crore, granting COVID-19 fee waivers to zonal licensees despite the Excise Department’s advice, causing a loss of Rs 144 crore, and not collecting adequate security deposits from zonal licensees, amounting to a loss of Rs 27 crore.
Failure to enforce rules
It also pointed out that there was license violation. The report highlighted failure to enforce Rule 35 of the Delhi Excise Rules, 2010, resulting in grant of licenses to wholesalers having interests in manufacturing and wholesalers having relationships with retailers. The report said this caused pollution of the entire liquor supply chain due to shared beneficial ownership among licensees involved in manufacturing, wholesale, and retail.
The report says this was done stating it was necessary to compensate for a quality checking system involving setting up government-approved labs at warehouses. But, no labs were established. Thus, the profit margin of wholesale licenses increased, while the revenue decreased.
No proper checks
According to the report, the AAP government handed over retail liquor licenses without proper checks on solvency, financial statements, and criminal records. Operating a liquor zone required an initial investment of over Rs 100 crore, but no financial criteria were set for qualification, it pointed out. Licenses were given to financially weaker entities, with several bidders reporting little to no income over the past three years, the report added.
The AAP government ignored recommendations of its own Expert Committee while drafting the 2021-22 Excise Policy, with no justification recorded, the report said. The policy allowed a single applicant to operate up to 54 liquor vends, (previous limit was 2) – which paved the way for monopolies and cartelisation, the report underlined.
The policy of AAP prompted manufacturers to tie up with a single wholesaler, permitting a few wholesalers to dominate the supply chain. Out of 367 registered IMFL brands, 25 accounted for nearly 70% of total liquor sales in Delhi, the report said. Significant exemptions and relaxations, which had a considerable impact on revenue, were granted without Cabinet approval or consultation with the LG.
The AAP’s Excise Department gave nod to liquor vends in nonconforming (residential/mixed land use) areas without mandatory approval from MCD or DDA, the report added. It also said that the testing rules were breached. “In 51% of foreign liquor test cases, reports were either older than 1 year, missing, or had no date – indicating QC negligence,” the report pointed out. It also said that there was poor data management and illegal liquor trade was encouraged due to the flawed policy.
