AAP’s liquor policy caused Rs 2,000cr loss to authorities: CAG | India News

NEW DELHI: Delhi authorities suffered a income loss of greater than Rs 2,000 crore in implementing the contentious Delhi Excise Policy 2021-22, the Comptroller and Auditor General (CAG) revealed in a report that was tabled in Delhi meeting on Tuesday. The policy was withdrawn after 9 months following registration of a case by CBI in July 2022 to probe alleged irregularities in its formulation and implementation.
The federal auditor highlighted that the suggestions of an knowledgeable committee — shaped by govt to establish lacunae within the earlier excise policy and counsel modifications for the formation of a brand new excise policy — had been ignored with none justification. The new policy had inherent design points which elevated the chance of monopolisation and cartel formation.
The CBI case and a associated probe by ED into alleged fees of cash laundering snowballed into a serious political slugfest between BJP and AAP govt in Delhi. The investigating companies arrested a number of folks within the case, together with the then chief minister, Arvind Kejriwal, his deputy, Manish Sisodia, and Rajya Sabha MP Sanjay Singh. All three are presently out on bail.

CAG evaluated Delhi govt’s regulation and provide of liquor within the capital from 2017-18 to 2020-21 monetary years. The report was reportedly despatched to the LG and Delhi govt almost 10 months in the past however was not tabled within the meeting. Newly elected CM Rekha Gupta tabled the report, which is claimed to be certainly one of 14 pending with Delhi govt, on Tuesday.
According to CAG, Delhi excise division claimed a loss of income to the tune of Rs 941.53 crore, saying well timed permissions weren’t taken for opening liquor vends in non-conforming municipal wards whereas Rs 890.15 crore was misplaced on account of licence price after 19 zonal licensees surrendered their permits a lot earlier than the policy was withdrawn however re-tendering couldn’t be achieved. It added that there was a loss of Rs 144 crore due to the “irregular grant of waiver” to licensees due to Covid-related restrictions and closure of outlets for a month from Dec 28, 2021, to Jan 27, 2022, whereas Rs 27 crore was the shortfall of the safety deposit collected from zonal licensees.
The report states that Master Plan Delhi-2021 prohibited the opening of liquor vends in non-conforming areas however Delhi Excise Policy 2021-22 mandated opening at the least two retail vends in every ward. “The excise department did not take timely action to work out modalities for the proposed vends in non-conforming areas and the initial tender was floated on June 28, 2021, without taking comments from DDA and MCD,” it stated.
“Audit noted that due to a number of issues ranging from a weak policy framework to deficient implementation of the policy…there was a cumulative loss of approximately 2,002.68 crore,” stated CAG.

The report stated {that a} group of ministers (GoM), headed by the then deputy CM and excise minister Manish Sisodia, modified a number of suggestions of the knowledgeable committee shaped to formulate the policy and allowed personal events to deal with wholesale liquor operations, launched one-time bidding as a substitute of a lottery system to allocate vends and let licensees have 54 vends towards the really helpful two per entity. It added that sure choices with income implications — leisure of the coercive motion mandated towards defaulter licensees, waiver in license price, refund of earnest cash deposit in case of the airport zone and correction in formulae to calculate most retail worth of international liquor — had been taken with out having obligatory approval of the cupboard and opinion of the lieutenant governor.
The auditor identified that the policy led to the dangers of monopolies and model pushing by permitting an “exclusive arrangement” between a couple of wholesalers and producers and letting the distributors dominate the liquor provide chain. According to the report, simply three distributors managed over 71% of the whole liquor provide chain within the capital and nearly determined which model would succeed or fail.
The report talked about that of 367 registered Indian Made Foreign Liquor manufacturers, 25 accounted for almost 70% of complete liquor gross sales in Delhi and only a few fashionable ones shaped the majority of gross sales quantity, thus pointing in direction of formation of a cartel.
“The policy mandated an exclusive arrangement between a manufacturer and wholesalers, which led to the entire supply of all brands of a particular manufacturer being controlled by only one wholesaler. This becomes particularly relevant considering the fact that 367 IMFL brands were registered in Delhi,” the report talked about.
This, the CAG talked about, led to limiting the variety of complete licensees and growing the chance of monopolisation and cartel formation. Under the brand new excise policy, wholesale licences for the provision of IMFL and FL had been granted to 14 enterprise entities, whereas the identical had been granted to 77 producers of IMFL and 24 suppliers of FL within the outdated 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 govt corporations and 262 retail vends were allotted to private individuals previously,” the report said.
It added that the GoM had mentioned in its report that the entire liquor retail market under the old excise regime was controlled by a few big players through a fraudulent proxy model, but the new policy – instead of removing this anomaly – recommended distribution of retail licences in zones where one entity or person could get up to 54 vends (in two zones, the maximum one could be allotted).
According to the report, the licensees were required to set up laboratories before they were granted the licence but the excise department issued the related guidelines only a week before the new policy was rolled out. “The essential pre-condition to set up laboratories to ensure quality of liquor supplied was not enforced by the excise department due to delay in issuing guidelines. The licensees were allowed an extension of two months initially for setting up of the laboratory though there was no provision for this in the policy. A further extension till March 31, 2022, was granted due to the Covid pandemic. Even after this extension, they were set up only in 19 out of 62 warehouses. Batch testing was not even started in these labs,” stated the report.
CAG stated the division was supposed to represent particular groups to decide up samples from bonded warehouses, retail vends, motels, golf equipment and eating places throughout all manufacturers and publish experiences of the identical on the web site. No reply was supplied regardless of a number of reminders and it couldn’t be verified whether or not such particular groups had been ever constituted, it said.
“Several fundamental changes were effected in the excise policy for 2021-22 relating to the levy and collection of excise duty, administration of the liquor supply chain and coverage of retail operations. The actual policy contained provisions which were at variance with the underlying objectives for change in policy and the expert committee report,” the CAG report talked about.
“Responsibility and accountability should be fixed for the lapses observed and the enforcement mechanism should be strengthened,” it concluded.