Recent audit by the Comptroller and Auditor General (CAG) has brought to light significant irregularities in the implementation of Delhi’s now-withdrawn excise policy, resulting in an estimated revenue loss of ₹2,026 crore to the state exchequer. The report highlights deviations from the policy’s intended objectives, a lack of transparency in pricing mechanisms, and violations in the issuance and renewal of licenses, all contributing to this substantial financial shortfall.
The excise policy, introduced by the Delhi government in November 2021, aimed to revamp the city’s liquor trade by increasing revenue and simplifying the licensing process. However, the CAG’s findings suggest that the policy’s execution was fraught with inconsistencies and oversight failures. One of the primary concerns raised is the awarding of licenses to entities without thorough verification of their financial stability. In certain instances, licenses were granted to companies operating at a loss, raising questions about the due diligence exercised during the selection process. Moreover, the report points out that even when violations occurred in the licensing process, appropriate penalties were not imposed, indicating a lapse in regulatory enforcement.
A significant portion of the revenue loss, approximately ₹890 crore, is attributed to the government’s failure to re-tender retail licenses that were surrendered before the policy period concluded. Instead of initiating a fresh bidding process to allocate these licenses, the authorities left them unassigned, leading to a considerable dent in projected revenues. Additionally, exemptions granted to zonal licensees resulted in a further loss of ₹941 crore. These exemptions, which deviated from standard policy provisions, were implemented without obtaining the necessary approvals from the Cabinet or the Lieutenant Governor, as mandated.
The CAG report also underscores the lack of transparency in the pricing of Indian-made foreign liquor (IMFL). The policy permitted manufacturers and wholesalers to set their ex-distillery prices (EDP) at their discretion. This autonomy led to price manipulations, where certain entities adjusted prices to their advantage, adversely affecting sales volumes and, consequently, the state’s revenue. The absence of a standardized pricing mechanism not only created market distortions but also undermined consumer interests.
Another critical issue highlighted is the non-compliance with procedural norms in policy formulation and implementation. The report reveals that several key decisions, especially those with significant revenue implications, were made without seeking the requisite approvals from the Cabinet or consulting the Lieutenant Governor. Furthermore, amendments to excise rules were not presented before the legislative assembly for ratification, contravening established legislative procedures.
The political ramifications of the CAG’s findings have been immediate and intense. Leaders from opposition parties have seized upon the report to criticize the Delhi government’s handling of the excise policy. BJP President J.P. Nadda stated, “Intoxicated by power, high on misgovernance. ‘AAP’DA model of loot in full display and that too on something like liquor.” Similarly, BJP MP Manoj Tiwari accused the Aam Aadmi Party (AAP) leadership of orchestrating a well-planned conspiracy, alleging that government rules were consistently disregarded in the policy’s implementation.
In response, AAP representatives have dismissed the allegations, questioning the authenticity of the report. AAP’s chief national spokesperson, Priyanka Kakkar, contended that the report had not been reviewed by key stakeholders, including the Chief Minister and the Lieutenant Governor, nor was it available on the CAG’s official website. She suggested that the document being cited might be a fabrication, stating, “This is the same sheet of paper that the BJP manufactures at its office… that has no credibility.”
The controversy surrounding the excise policy has also led to legal challenges and investigations by central agencies. The Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) have initiated probes into the alleged irregularities, resulting in the arrests of several senior officials and political figures associated with the policy’s formulation and execution. These developments have further intensified the political discourse, especially with upcoming elections on the horizon.
In light of the CAG’s revelations, there have been calls for a comprehensive review of the policy and its implementation mechanisms. Stakeholders and policy analysts emphasize the need for enhanced transparency, strict adherence to procedural protocols, and robust oversight to prevent such lapses in the future. Ensuring that policy decisions undergo rigorous scrutiny and are executed with integrity is crucial to maintaining public trust and safeguarding state resources.
As the situation continues to evolve, the Delhi government faces mounting pressure to address the issues raised in the CAG report. The outcomes of ongoing investigations and potential policy reforms will likely have lasting implications for governance practices and political dynamics in the region.
