The Comptroller and Auditor General (CAG) of India recently released a report scrutinizing the Delhi Excise Policy 2021-22, revealing significant lapses and financial losses exceeding ₹2,000 crore. Implemented by the Aam Aadmi Party (AAP) government in November 2021 and subsequently withdrawn amid corruption allegations, the policy aimed to reform Delhi’s liquor trade but instead led to substantial revenue deficits and procedural violations.
In This Article:
Key Findings of the CAG Report
- Revenue Losses Due to Non-Conforming Areas
The policy mandated the opening of at least two liquor vends in each municipal ward. However, many vends were proposed in non-conforming areas—zones not designated for commercial activities. The excise department failed to secure timely permissions from municipal authorities, resulting in a revenue loss of approximately ₹941.53 crore.
- Surrender of Licenses and Lack of Re-Tendering
Nineteen zonal licensees surrendered their licenses prematurely. The excise department did not initiate re-tendering processes for these zones, leading to an additional revenue loss of ₹890.15 crore.
- Irregular Waivers During COVID-19
A waiver of ₹144 crore was granted to licensees citing COVID-19 restrictions from December 28, 2021, to January 27, 2022. This decision contradicted the tender document’s stipulation that commercial risks were to be borne by the licensees, indicating procedural lapses.
- Monopoly and Cartelization Risks
The policy allowed individual entities to operate up to 54 liquor vends, a significant increase from the previous limit of two. This change raised concerns about monopolistic practices and cartel formation, as a few players could dominate the market, undermining fair competition.
- Procedural Violations in License Issuance
The report highlighted that licenses were issued without proper verification of solvency, audited financial statements, and criminal background checks. Such oversights compromised the integrity of the licensing process and raised questions about the beneficiaries’ credibility.
- Non-Compliance with Master Plan Delhi-2021
The Master Plan Delhi-2021 prohibits the establishment of liquor vends in non-conforming areas. Despite this, the excise policy mandated the opening of vends in these zones without obtaining necessary approvals, leading to legal and operational challenges.
- Lack of Quality Control Measures
The policy required licensees to establish quality control laboratories to ensure the safety and standard of liquor sold. However, guidelines for setting up these labs were issued just a week before the policy’s rollout, and extensions were granted without proper provisions, leading to inadequate quality assurance.
Weak Monitoring Mechanisms and the Need for Regulatory Reforms
Another crucial aspect highlighted by the CAG report is the lack of a well-defined mechanism to monitor policy implementation and assess its impact in real time. The absence of an independent regulatory body or audit framework allowed irregularities to persist without immediate corrective action. Strengthening oversight mechanisms, implementing technology-driven tracking systems, and ensuring greater transparency in the decision-making process can help prevent such policy failures in the future. This case serves as a stark reminder that policy reforms, particularly in revenue-sensitive sectors like excise, must be backed by stringent governance measures to safeguard public funds and trust.
Implications and Responses
The CAG’s findings have sparked a political debate, with opposition parties criticizing the AAP government for alleged mismanagement and corruption. The report suggests that the excise policy’s formulation and implementation were marred by significant administrative failures, leading to substantial financial losses for the Delhi government.
In response, the AAP government has defended its intentions behind the policy, stating that it aimed to curb the liquor mafia and increase revenue through systematic reforms. However, the CAG report indicates that the policy’s execution deviated from its stated objectives, resulting in monopolistic practices and revenue shortfalls.
The CAG’s audit of the Delhi Excise Policy 2021-22 underscores the necessity for meticulous planning, adherence to legal frameworks, and robust oversight in policy implementation. The highlighted lapses not only led to significant financial losses but also raised concerns about governance and transparency. As Delhi moves forward, it is imperative that future policies are crafted with comprehensive stakeholder consultation, rigorous procedural compliance, and unwavering commitment to public interest to prevent such costly oversights.
By – Jyothi
