The Delhi Government suffered cumulative losses of over ₹2,000 crore due to the 2021-2022 Excise policy for reasons ranging from weak policy framework to deficient implementation, according to a CAG report tabled in the Assembly on Tuesday (February 25, 2025).
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“Therefore, these implementation issues of the new policy led to a loss of revenue of approximately ₹ 2,002 crore,” the report said.
“Excise Policy aimed to eradicate sale of spurious liquor and check bootlegging. However, important measures which were planned in the policy like setting up of liquor testing laboratories, batch testing for rigorous quality assurance, and monitoring and regulation through creation of a dedicated post were not ensured,” it added.
The report, one of 14 on the previous Aam Aadmi Party (AAP) Government’s performance to be tabled by the new Rekha Gupta-led dispensation, has also flagged violations in the process of issuing licences. It has pointed out that recommendations of an expert panel, formed to suggest changes for the formation of the now scrapped policy, were ignored by then Deputy Chief Minister and Excise Minister Manish Sisodia.
The report on the alleged liquor scam, a hot button issue in the run-up to the elections, claimed a loss of revenue to the tune of ₹941.53 crore, saying timely permissions were not taken for opening the liquor vends in “non-conforming municipal wards”.
Non-conforming areas are areas which do not conform to land use norms for opening of liquor vends.
‘₹890.15 crore loss on account of license fee’
“The Excise Department suffered a loss of approximately ₹890.15 crore on account of license fee from these zones owing to their surrender and failure of the department in re-tendering,” the report, tabled by the Chief Minister, added.
Besides, there was loss of revenue to the tune of ₹144 crore due to “irregular grant” of waiver to the licensees because of Covid pandemic related closure, the report said.
The alleged irregularities in the formulation and implementation of the policy had snowballed into a political punching bag used by the BJP after Lt. Governor V.K. Saxena recommended a CBI probe in July 2022. Top leaders of the AAP, including Arvind Kejriwal, Mr. Sisodia and Sanjay Singh, have spent months in jail after probe agencies arrested them in the case.
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.
According to the report, the tender document for opening new vends had said no liquor stores would be located in a non-conforming area. In case, a vend was in a non-conforming area, it had to be considered with the prior approval of the government, said the report.
“The Excise Department did not take timely action to work out modalities for proposed vends in non-conforming areas and the initial tender was floated on June 28, 2021 without taking comments from the DDA and MCD,” it said.
‘Cumulative loss of nearly ₹941.53 crore’
Licences were allotted in August 2021 even before this issue was sorted out and the vends were scheduled to start operations from November 17, 2021. Meanwhile, the Delhi Development Authority (DDA) issued an order on November 16, 2021, disallowing vends in non-conforming areas, it said.
The licensees then approached the High Court. On December 9, 2021, the court exempted them from paying any licence fee in respect of mandatory vends in 67 non-conforming wards. This resulted in the exemption of licence fee of ₹114.50 crore per month.
“Non-sorting of this issue before notice inviting tender (NIT), resulted in this exemption and a cumulative loss of nearly ₹941.53 crore,” said the CAG report.
The report pointed out that 19 zonal licensees had surrendered their licences before the policy expired in August 2022 — four in March 2022, five in May 2022 and 10 in July 2022.
However, no re-tendering process was initiated by the Excise Department to operationalise the retail vends in these zones. 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 licensees sought a waiver from the Excise Department, citing Covid restriction from December 28, 2021 to January 4, 2022. The High Court in its order on January 6, 2022, asked the department to pass a reasoned order on the matter.
The Excise and Finance Departments after examining the matter proposed that proportionate waiver in license fee due to Covid restrictions may not be considered as there is no provision in the tender document for it, said the report.
“This proposal was turned down by the Minister in charge of the Department and grant of waiver to each Zonal licensee for the closed vends during the period from 28 December 2021 to 27 January 2022 was approved,” it said.
The approval was given by the Minister (Manish Sisodia) with the reason that the government had given the benefit of pro-rata fee waiver to hotels, clubs and restaurants (HCR) during Covid lockdown, it said.
“This resulted into the loss of approximately pro rata ₹144 crore to the government,” the report claimed.
The report further noted a loss of ₹27 crore owing to “incorrect” collection of security deposits from the licensees.
‘GoM changed recommendations of expert panel’
The report stated that the group of Ministers (GoM), headed by then Deputy CM and Excise Minister Manish Sisodia, changed recommendations of the expert committee formed to formulate the policy.
Going against the recommendation of the committee, the GoM allowed private parties to handle wholesale liquor operations, introduced one time bidding instead of lottery system to allocate vends, allowing bidders to have 54 vends against recommended two per individual, it said.
According to the report, certain decisions with revenue implications were taken without having approval of the Cabinet and opinion of the Lieutenant Governor. These included relaxation from coercive action against defaulter licensees, waiver in license fee, refund of earnest money deposit in case of airport zone, correction in formulae to calculate maximum retail price of foreign liquor.
“Audit noted that due to a number of issues ranging from weak policy framework to deficient implementation of the policy…there was a cumulative loss of approximately 2,002.68 crores” the CAG said in the report.
The BJP has been alleging that the reports were withheld by the AAP administration.
Pending CAG audits
Delhi Chief Minister Rekha Gupta had announced last Thursday (Feb. 20) that the reports would be made public in the first session under the new government. The pending CAG audits include reviews of State finances, public health infrastructure, vehicular air pollution, liquor regulation and the functioning of the Delhi Transport Corporation, among others.
The AAP Government not tabling 14 CAG reports, including the current one, had become controversial with then BJP Opposition MLAs filing a petition last year with the Delhi High Court. They sought a direction from the HC to the Speaker to call a sitting of the Assembly for the tabling of the reports.
During a hearing held on January 13, 2025, the Court said the CAG reports should have been promptly placed before the Assembly for discussion and the State Government “dragging its feet” on the issue raised “doubts on its bonafides.
Published – February 25, 2025 01:08 pm IST
Source:https://www.thehindu.com/news/cities/Delhi/delhi-govt-suffered-losses-of-2000-crore-due-to-liquor-policy-cag-report/article69261288.ece