The Comptroller and Auditor General of India’s (CAG) report on Delhi’s excise department, presented in the assembly by Chief Minister Rekha Gupta, has highlighted that the former AAP government’s decision to implement the new excise policy led to losses exceeding ₹2,000 crore for the national capital’s exchequer.
According to the report, multiple factors, including a weak policy framework and ineffective implementation, contributed to a cumulative loss of approximately ₹2,002.68 crore.
The Delhi excise policy was scrapped in 2022 after Lieutenant Governor VK Saxena ordered an FIR into alleged corruption in its execution. Several AAP leaders, including Manish Sisodia and Arvind Kejriwal, were imprisoned for months due to their alleged involvement in the case.
The Aam Aadmi Party and the BJP have been engaged in a political tussle over the delay in tabling 14 CAG reports in the Delhi assembly, intended to evaluate the performance of the previous government.
Key Findings of the CAG Report on Delhi’s Excise Policy
The report identified procedural violations in the issuance of liquor licenses and stated that the recommendations of an expert panel formed to guide the policy’s formation were disregarded by the then deputy chief minister and excise minister, Manish Sisodia.
It further claimed that revenue losses amounting to ₹941.53 crore occurred because timely approvals were not secured for opening liquor vends in “non-conforming municipal wards.”
Additionally, the excise department faced an estimated loss of ₹890.15 crore in license fees due to surrendered zones and the department’s failure to re-tender them.
A further revenue loss of ₹144 crore was attributed to an “irregular grant” of waivers to licensees owing to Covid-related closures.
The report pointed out that the Master Plan Delhi-2021 prohibited liquor vends in non-conforming areas. However, the Excise Policy 2021-22 mandated opening at least two retail vends per ward. It noted that the excise department failed to address this issue in time and floated a tender on June 28, 2021, without seeking input from the Delhi Development Authority (DDA) and the Municipal Corporation of Delhi (MCD).
The report stated that liquor licenses were issued in August 2021, even before the matter was resolved, and the vends were scheduled to start operations by November 17, 2021. However, the DDA issued an order on November 16, 2021, prohibiting vends in non-conforming areas.
Subsequently, licensees approached the high court, which, on December 9, 2021, ruled that they were exempt from paying license fees for the mandatory vends in 67 non-conforming wards. This resulted in a financial loss of ₹114.50 crore per month.
The report further stated that Delhi government departments had suggested that a proportional waiver in license fees due to Covid restrictions should not be considered, as it was not included in the tender document. However, this proposal was rejected by the excise minister, who approved a waiver for zonal licensees for the period from December 28, 2021, to January 27, 2022.