Editor’s Note
This article discusses a report by India’s Comptroller and Auditor General (CAG) which states that the Delhi government incurred a significant loss due to its new excise policy. The findings highlight ongoing scrutiny of fiscal management and policy implementation.
A report by the Comptroller and Auditor General (CAG) has revealed that the Delhi government suffered a loss of approximately Rs 2,002.68 crore due to the new excise policy.
New Delhi: The six decisions related to the sweeping changes made in the new liquor policy implemented in November 2021 during the tenure of the Aam Aadmi Party (AAP) government in Delhi were not known to the government’s cabinet and the Lieutenant Governor (LG). Under the new policy, liquor sales began in Delhi, and suddenly on September 1, 2022, the AAP government withdrew this policy. Prior to this, the opposition had been alleging a scam in the policy brought for liquor sales.
The investigation report on this matter had been submitted by the CAG to the Delhi government months ago. The then-government had not presented it in the Assembly. After the change of power in Delhi, the BJP government tabled the CAG report related to the liquor policy in the Assembly on Tuesday. It mentions several financial irregularities associated with this policy. The report presented by Chief Minister Rekha Gupta also mentions those six decisions which even the cabinet of the AAP government and the Lieutenant Governor were unaware of.
According to the policy regarding waiver on penal action against licensees for any default in payment of license fee within the stipulated time, if a licensee fails to pay all outstanding amounts (including interest and penalty for delayed payment) by the last day of the month, the security deposit would be forfeited and the license cancelled and re-tendered. However, licensees were regularly not paying the license fee even by the end of the month in which all payments were due. In this regard, a proposal to keep in abeyance the penal action of license cancellation due to any default in outstanding payment till the end of the product year 2021-22 was approved by the department on January 20, 2022. This decision was taken and implemented without cabinet approval and the LG’s opinion. Two licensees defaulted on license fee payment.
A waiver of Rs 144 crore as license fee was granted in January 2022 under the orders of DDMA. It was given to retail licensees due to COVID restrictions without cabinet approval.
The LG had constituted a committee under the chairmanship of the Vice Chairman of DDA to examine the issue of opening liquor shops in non-conforming wards and gave appropriate recommendations. The committee recommended opening additional shops in conforming wards in lieu of shops falling in non-conforming wards. Subsequently, licensees were allowed to open additional shops in lieu of non-conforming wards within a period of one month, without the requisite cabinet approval or the LG’s opinion.
As per Rule 34(2) of the Delhi Excise Rules, 2010, “the Government may extend the period of any non-renewable license (such as wholesale license) expiring on 31st March of any year for a further period or for such period as it may deem fit on advance payment of the prescribed fee.” However, the Excise Policy 2021-22 (which also included non-renewable licenses) was initially extended till May 31, 2022, and then till July 31, 2022, without cabinet approval or the LG’s opinion.
The tender for the airport zone was issued on June 28, 2021. Subsequently, in response to pre-bid queries, an order was issued on July 9, 2021, that if an applicant fails to obtain NOC from airport authorities for opening liquor shops within 30 days, the earnest money should be refunded.
On November 1, 2021, approval was given to a proposal for revision of formulas for calculation of rates of beer and foreign liquor. While approving the proposal, it was mentioned that ratification by the GoM and Cabinet could be done later. This was a violation of Rule 54 (1) of the Delhi Excise Rules, 2010, which states that the criteria for determination of wholesale or MRP of liquor for each license year shall be fixed by the Excise Commissioner with the approval of the Government i.e., the Lieutenant Governor.