Liquor Wholesalers Masquerading as Retailers: CAG Report Exposes ‘Preferential’ Licensing in Alleged Delhi Excise Scam
The recent unveiling of the Comptroller and Auditor General (CAG) report on Delhi Liquor Policy has sent shockwaves through the capital. Tabled in the Delhi Assembly on Tuesday, this 208-page report sheds light on a scandalous affair that involves a group of ministers (GoM), spearheaded by the then Deputy Chief Minister and Excise Minister, Manish Sisodia. The report alleges that the GoM, under his leadership, made a series of questionable decisions that deviated from the recommendations put forth by an expert panel tasked with formulating the policy. These deviations, the report claims, led to a staggering loss of approximately ₹2,002 crore to the Delhi government.
The GoM’s decisions, as outlined in the CAG report, include allowing private players to take over wholesale liquor operations, despite the expert committee’s recommendation for a government takeover through a separate state beverage/wholesale corporation. The expert panel’s rationale for this recommendation stemmed from past instances of dual ownership (wholesale and retail) by related private entities, along with suspicions of complicity among wholesalers in the illegal supply of liquor through duplicate barcodes.
Expert Insights on Policy Recommendations
In a surprising turn of events, the GoM endorsed the issuance of L-1 licenses exclusively to private entities, disregarding the formation of a government-owned wholesale corporation. The rationale cited for this decision was the time-consuming nature of implementing such a corporation, advocating for a temporary measure until then. L-1 licenses, granted for the wholesale supply of Indian liquor, were thus handed over to private players, despite earlier claims by the government that private wholesale operations were only a stopgap arrangement.
According to the CAG report, the expert committee had recommended the retention of Excise Duty collection on a per-bottle basis, albeit with alterations to the pricing mechanism. However, the GoM opted for the advance collection of excise duty in the form of a license fee, a move that severed the link between the duty collected and the actual sale of liquor. This decision, as per the report, introduced further complexities and potential loopholes in the system.
Unveiling the Wholesale and Retail License Norms
The CAG report reveals a troubling trend in the dilution of provisions within the Delhi Excise Policy related to wholesale and retail licenses. The earlier policy explicitly prohibited individuals or their family members with interests in distilleries, breweries, or bottling plants from obtaining retail licenses. However, the revised policy saw a relaxation of these criteria, resulting in the issuance of licenses to entities with shared interests among key stakeholders.
Furthermore, the report cites specific examples of interconnectedness between licensees, pointing to instances where common beneficial ownership was observed. For instance, the relationship between M/s Indospirit, a wholesale licensee, and M/s Khao Gali Restaurants, a zonal licensee, raised concerns due to shared directorships and financial stakes. This interconnected web of relationships, as highlighted in the report, underscores the need for transparency and accountability in the licensing process.
The CAG’s analysis of the liquor supply pattern in Delhi reveals that a significant portion (71.70%) of wholesale distribution is controlled by three major entities: Indospirit, Brindco, and Mahadev Liquor. These entities, particularly Indospirit and Brindco, exclusively supply brands from major manufacturers like United Spirits, United Breweries, and Pernod Ricard, further consolidating their market dominance. Additionally, the report highlights disparities in sales volumes across different retail zones, with a handful of business entities holding a disproportionate share of the market.
In conclusion, the CAG report paints a grim picture of the Delhi liquor industry, raising concerns about preferential treatment, regulatory lapses, and potential conflicts of interest. As the investigation unfolds, it remains to be seen how the authorities will address these pressing issues and restore transparency and fairness to the excise system. Stay tuned for more updates on this unfolding scandal.
