CAG Report Exposes Rs 2,002 Crore Loss from Scrapped Delhi Liquor Policy

NEW DELHI:
A report by the Comptroller and Auditor General (CAG), presented in the Delhi Assembly on Tuesday, has revealed that the now-defunct liquor policy—implemented in November 2021 and scrapped in September 2022—resulted in a massive Rs 2,002.68 crore loss for the Delhi government.

The policy became a political burden for the former AAP government, leading to the arrest of key leaders, including ex-Chief Minister Arvind Kejriwal and former Deputy CM Manish Sisodia, on corruption charges. The controversy surrounding it also played a significant role in AAP’s recent electoral defeat, allowing the BJP to return to power in Delhi after 26 years.

The report, tabled amid uproar in the Assembly and the suspension of 15 AAP MLAs, details multiple financial lapses that contributed to the loss. The biggest chunk, amounting to Rs 941.53 crore, was due to liquor shops not being permitted in non-conforming areas, preventing potential revenue generation. Another Rs 890.15 crore was lost as tenders were not issued for 19 zones where liquor licences had been surrendered, and no alternative arrangements were made to continue liquor sales in these regions. Additionally, Rs 144 crore in revenue was lost due to fee waivers granted to licensees under the pretext of COVID-19 relief, while incorrect collection of security deposits from zonal licensees resulted in an additional Rs 27 crore loss.

The CAG report also points to serious violations in policy implementation. It highlights the Delhi Excise Department’s failure to enforce Rule 35 of the Delhi Excise Rules, 2010, which prohibits a single entity from holding multiple liquor licences across different categories such as wholesale, retail, and HCR (hotels, clubs, and restaurants). Sources indicate that this lapse benefited select individuals. One of the most controversial aspects of the policy was the increase in the wholesale margin from 5% to 12%, which the Enforcement Directorate (ED) alleged was partly used as kickbacks for AAP leaders. The policy attempted to justify this increase by citing the need for government-approved quality testing labs and transportation costs. However, the CAG report states that these labs were never set up, and the transportation charges did not warrant such a steep hike in distributor margins.

With these revelations, the report underscores concerns over the handling of Delhi’s excise policy, adding to the mounting allegations of corruption and financial mismanagement that have cast a shadow over the AAP government.