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Rs 2026 crore loss, lapses in policy implementation, kickbacks: Read what CAG report on scrapped Liquor Policy in Delhi says

This is the first time a quantified loss has been attributed to the liquor scam, raising serious questions about AAP’s governance under the leadership of Arvind Kejriwal and the accountability of the ruling Aam Aadmi Party.

On 11th January, the Comptroller and Auditor General (CAG) released its report on the Delhi government’s now-repealed excise policy. The CAG revealed that the policy resulted in a staggering Rs 2,026 crore loss to the public exchequer. Furthermore, the report highlighted significant lapses in policy implementation and stated that it was ultimately the taxpayers who paid the price of the mismanagement, while there are also allegations of kickbacks having benefited Aam Aadmi Party leaders.

This is the first time a quantified loss has been attributed to the alleged liquor scam, raising serious questions about AAP’s governance under the leadership of Arvind Kejriwal and the accountability of the ruling Aam Aadmi Party in the national capital. The report could have serious consequences for AAP in the upcoming Assembly Elections in Delhi.

Notably, the report suggested that at the core of the issue is the Group of Ministers (GoM) led by former Delhi minister Manish Sisodia. The CAG stated that the GoM disregarded recommendations from an expert panel. Furthermore, the decision-making process was marred by irregularities, which allowed all entities to bid for licences despite documented complaints and financial weaknesses. For example, a licence was renewed for a firm operating at a loss, which further pointed towards negligence.

Violators of licensing conditions were not penalised, and there was a lack of transparency in pricing decisions, which added to the problem. Cabinet and Lieutenant Governor approvals were bypassed on several key matters, and excise rules, which should have been ratified by the Delhi Assembly, were kept from legislative scrutiny.

The CAG highlighted that the financial breakdown of the mismanagement in the excise policy by the AAP government led to a loss of Rs 2,026 crore, painting a grim picture. The failure of the ruling party to re-tender retail licences surrendered mid-policy resulted in a loss of Rs 890 crore. Adding to the financial misery, the government granted exemptions to zonal licensees, which caused additional revenue depletion of Rs 941 crore. Furthermore, the government waived Rs 144 crore worth of licence fees, which was “justified” under COVID-19 restrictions. This directly contradicted tender provisions that placed all commercial risks on licensees. To add to the woes, the incorrect collection of security deposits led to a Rs 27 crore loss.

The CAG report further criticised the implementation of the excise policy as sub-optimal. It prevented its stated objectives from being achieved. There was a lack of scrutiny over the financial conditions and managerial expertise of the bidders, which led to a weak system. The exclusive arrangements between wholesalers and zonal licensees distorted competition. Key measures like the establishment of quality assurance facilities, including testing labs, were not implemented. Even the equitable distribution of retail vends, a critical policy goal, was left unfulfilled.

BJP and Congress targeted AAP over CAG report

In a post on X, Bharatiya Janata Party president and MP JP Nadda said, “Intoxicated by power, high on misgovernance. ‘AAP’DA model of loot in full display and that too on something like liquor. Just a matter of a few weeks before they are voted out and punished for their misdeeds. CAG Report on ‘Liquorgate’ exposes @ArvindKejriwal and @AamAadmiParty Gov. Intentional ‘Lapses’ in Policy Implementation. Rs 2026 Cr Loss to Exchequer money.”

BJP MP Manoj Tiwari said, “CAG has revealed the whole story of the corruption of AAP chief Arvind Kejriwal, who has played the role of a broker by destroying the happiness of Delhi… This is the same CAG report which Arvind Kejriwal used to wave in 2013 to fight against Sheila Dikshit and today the same CAG report has declared Arvind Kejriwal corrupt…”

Delhi BJP President Virendra Sachdeva said, “BJP has been saying this from the first day that the Rs 2026 crore scam was highlighted in the CAG report and it clearly tells that it was deliberately done by Arvind Kejriwal and Manish Sisodia. According to the CAG report, it was a well-planned conspiracy… Government rules were disregarded every time… Why is Arvind Kejriwal not tabling the CAG report in the Assembly?…”

Former Union Minister and BJP MP Anurag Thakur on CAG Report on Delhi Liquor Policy said, “The ten findings of the CAG report are very detailed, and I will explain them to you one by one. The first finding is about revenue loss a loss of ₹2026 crore. The second finding is deviation from the objectives of the policy. The third finding is that the expert panel’s recommendations were ignored by the Group of Ministers (GOM)….”

Delhi Congress President Devender Yadav said, “We have been continuously saying that the CAG report should be tabled as soon as possible. I have also received some information from social media, according to which the loss of Rs 2000 crores to the exchequer has been directly caused by this liquor deal. I am also saddened by the fact that during this time there was also a winter session, should this report not have been tabled there? This makes one thing clear. There was some deal behind all this due to which there was a delay in bringing the CAG report. I want to ask what was the deal between AAP and BJP that there was so much delay in presenting the CAG report…”

The CAG report has come at a time when political parties are focused on the upcoming Delhi Assembly elections. The massive revenue loss underlined in the report has highlighted the need for accountability and a thorough investigation into these lapses. There is a need for responsibility to be fixed for the irregularities, as the onus of restoring public trust now lies on those in power.

Delhi Liquor Scam

At the heart of the controversy is the Delhi Excise Policy 2021-2022, which has been explained in 10 simple points.

  • The liquor policy was first proposed in September 2020 but came into effect only in November 2021.
  • It changed the manner in which alcohol was being sold in the National Capital. Introduced private players in the market and marked the exit of government-owned liquor vendors.
  • Delhi was divided into 32 zones and a total of 27 private vendors were to ply in each zone. Every municipal ward had 2-3 liquor vendors operating in the area. 
  • Proposals such as home delivery of liquor, allowing liquor vendors to offer unlimited discounts, opening of stores till 3 am were also tabled before the Delhi Cabinet.
  • The drastic policy change resulted in a 27% increase in government revenue to ₹8900 crores. At the same time, it marked the complete exit of the Delhi government from the liquor business.
  • While the objective of Excise Policy 2021-2022 was to end black marketing and the liquor mafia, the Delhi government soon came under fire over allegations of corruption.
  • Chief Secretary of Delhi, Naresh Kumar, found irregularities and procedural lapses in the new liquor policy. Lieutenant Governor VK Saxena ordered a CBI probe on the recommendation of Naresh Kumar.
  • Manish Sisodia waived off ₹144.36 crores on the license fee, to be paid by the private liquor vendors, under the garb of the Coronavirus pandemic. Incurred loss to the Excise Department and benefitted liquor licensees by waiving the import pass fee of ₹50 per beer case.
  • All these changes were made without the final approval of the Lieutenant Governor and thus considered illegal under the Delhi Excise Rules of 2010 and Transaction of Business Rules of 1993.
  • Thus, the Delhi government made a U-turn on its new excise policy in July 2022. A month later, CBI booked Manish Sisodia, ex-Only Much Louder (OML) CEO Vijay Nair and 13 others in an FIR for irregularities in the implementation of the Delhi Excise Policy 2021-2022.
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