Rs 2,002-crore loss to Delhi Government due to liquor policy: CAG report

Mangalore Today News Network

New Delhi, February 25, 2025: Pointing to a string of wrong decisions and omissions, a report by the Comptroller and Auditor General (CAG) tabled in the Delhi Assembly on Tuesday states that the scrapped liquor policy which was implemented in November 2021 and scrapped in September the next year caused a loss of Rs 2,002.68 crore to the Delhi government.

The liquor policy was an albatross around the neck of the previous AAP government and had led to several of its leaders, including then chief minister Arvind Kejriwal and deputy chief minister Manish Sisodia, landing behind bars. The corruption allegations surrounding the policy are also seen as having played a key role in the AAP being defeated in this month’s Assembly elections and the BJP forming a government in Delhi after a gap of 26 years.

The report, which was tabled amid a huge uproar in the Assembly - which also saw 15 AAP MLAs being suspended - divides the losses into various subheads. It states that the biggest chunk of the loss, Rs 941.53 crore, was because liquor shops were not allowed to open in non-conforming areas - those that do not conform to land use norms for opening liquor vends - under the new policy.

The next big loss amount of Rs 890.15 crore was because of tenders not being issued for 19 zones where licences had been surrendered. "Consequently, no excise revenue accrued as licence fee from these zones in the months after surrender. Notably, no other contingent arrangement was put in place to continue liquor retail in these zones," the report states.

The report also said that a loss of revenue of Rs 144 was caused because of fees being waived to licensees in the name of Covid-19 and Rs 27 crore because of the "incorrect collection" of security deposit from zonal licensees. The figures under these four subheads add up to Rs 2,002.68 crore.

Violations

Flagging other violations, the CAG report states that the Delhi Excise department did not ensure proper implementation of Rule 35 of the Delhi Excise Rules, 2010, which prohibits the issuance of multiple licences of different categories - wholesaler, retailer, HCR (hotel, clubs and restaurants - to related parties. This, sources said, benefited certain people.

One of the key contentions of those opposing the liquor policy was that the wholesaler margin had been increased from 5% to 12%. The Enforcement Directorate had also said that half of this 12% was to be recovered from wholesalers as kickbacks for AAP leaders. The report said that the justification offered for hiking the margin was that licensees had to set up a government-approved laboratory at their warehouses to randomly check for sub-standard or spurious liquor in each batch received from the manufacturers and to cover the cost of local transportation.

It states that the local transportation charge "was not enough to justify the substantial increase in distributor margin" and the quality checking labs "which were to be set up, with apparently high cost incidence, were not put in place and operationalised."

This, sources said, promoted monopolisation and cartelisation.

Three wholesalers also accounted for over 70% of the liquor sold in Delhi. "Further, of the 367 brands of IMFL supplied by 13 Wholesale licensees, the highest number of brands were exclusively supplied by Indospirit (76 brands), followed by Mahadev Liquors (71 brands) and Brindco (45 brands). These three wholesalers also accounted for 71.70 per cent of volume of liquor sold in Delhi," the report says.

Government vs Private

Another key finding of the report was that the four highest-selling whiskey brands in Delhi were sold less at government shops and more at private ones, resulting in a loss of revenue for the Delhi government.

Only 9.25% of the sales of Royal Stag Reserve/Premier whiskey, for instance, were at government liquor shops, while private vends accounted for the remaining 90.75%. At 22.04% in government shops, the number was much better for Officer’s Choice Blue whiskey but stood at just 2.26% for "MCD No 1" whiskey, which likely stands for McDowell’s No 1.