Implementation issues with the new liquor policy led to a loss of over ₹2,000 crore for the Delhi government, a report by the Comptroller and Auditor General (CAG) tabled in the Delhi Assembly on Tuesday revealed.
“Implementation issues of the new policy led to a loss of revenue of approximately ₹2,002 crore,” the report said. Further, it mentioned that the Excise Policy aimed to eradicate the 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 said.
This is the same policy that resulted in the prosecution and imprisonment of former Delhi Chief Minister and Aam Aadmi Party (AAP) convener Arvind Kejriwal, as well as former Deputy Chief Minister and AAP leader Manish Sisodia. It also became a major issue in the recently concluded assembly election, where AAP lost power.
The audit report covers a four-year period from 2017-18 to 2020-21 to examine the regulation and supply of IMFL (Indian Made Foreign Liquor) and FL (Foreign Liquor) in Delhi. The supply chain of country liquor has been reviewed concerning confiscation activities. The audit observed several discrepancies in how the Excise Department monitored and regulated the supply of liquor in the NCT of Delhi. The working of the Excise Department raises several questions about how the department is fulfilling its responsibilities, the report said.
Talking about issues in the Excise Policy for the period 2017-21, the audit observed that the department could not ensure the implementation of Rule 35 of the Delhi Excise Rules, 2010, which prohibits the issuance of multiple licenses of different categories (Wholesaler, Retailer, HCR, etc.) to related parties, leading to the existence of common directorship among entities holding various license types. Furthermore, the department was issuing licenses without checking various requirements related to excise rules and the terms and conditions for issuing different types of licenses.
It was observed that licenses were issued without ensuring solvency, submission of audited financial statements, submission of data regarding sales and wholesale prices declared in other states across the years, and verification of criminal antecedents from the competent authority, etc. “It is imperative that cases of cross ownership and proxy ownership among companies applying for licenses, based on criteria like common directorship, percentage share-holding, unsecured loan to companies, be dealt with strictly to avoid unfair practices like cartelization in liquor trade and brand promotion,” the report advised.
Further, selective adherence to various rules and regulations in issuing licenses constitutes non-compliance with procedures, and responsibility should be fixed for such violations, it added.
Talking about quality, the report observed a number of instances where test reports were not compliant with BIS specifications, and the Excise Department issued licenses despite major shortcomings. Important test reports on water quality, harmful ingredients, heavy metals, methyl alcohol, microbiological tests, etc. were not submitted for various brands.
It highlighted that deficient test certificates were also noticed during scrutiny of test-checked reports. In respect of 51 per cent of the test-checked reports relating to foreign liquor, it was found that test reports furnished were older than one year, no test report was provided, or the date was not mentioned. “There is an urgent need that the Excise Department should proactively monitor the quality of alcohol and frame stringent quality standards and ensure compliance of the same,” the report recommended.