The CAG report stated that there are multiple stakeholders involved in the supply and distribution of liquor starting from the manufacturers/distilleries (located outside Delhi) to Warehouses located in Delhi and then to various vends, Hotels, Clubs and Restaurants.
The Delhi liquor scam caused a massive loss of Rs. 2,002 crore due to multiple violations, discounts, and policy loopholes. A new CAG report presented by Delhi Chief Minister Rekha Gupta in the Assembly today has exposed shocking details of how the new excise policy led to this financial setback. The report highlights several wrong decisions that resulted in huge revenue losses for the government.
The CAG report on the Performance Audit of ‘Regulation and Supply of Liquor in Delhi’ highlighted the complex network of stakeholders involved in the liquor supply chain—from manufacturers and distilleries (located outside Delhi) to Bonded Warehouses within the city, and further to government-run liquor stores, private shops, hotels, clubs, and restaurants before reaching the consumers. Additionally, the report points out the multiple revenue streams under which the Excise Department collects funds.
How did Delhi lose over Rs. 2,000 crore?
- Unopened liquor shops in non-conforming areas led to a loss of Rs. 941.53 crore.
- Failure to re-tender abandoned licenses resulted in a loss of Rs. 890 crore.
- COVID-19 fee waivers for liquor licenses cost Rs. 144 crore.
- Improper collection of security deposits led to another Rs. 27 crore loss.
- Excise Policy Rule 35 (Delhi Excise Policy, 2010) was not properly implemented.
Major flaws in the Liquor Policy
- People with interests in manufacturing and retail were given wholesale licenses, creating an unfair advantage.
- Wholesale profit margins were increased from 5% to 12%, benefiting wholesalers while reducing government revenue.
- No quality check labs were set up in warehouses, despite government promises.
- No screening or financial checks were done for liquor zone operations, even though ₹100 crore was required for it.
- Some bidders had little to no income in the last three years, raising concerns about proxy ownership and political favoritism.
- AAP government ignored its own expert committee’s recommendations and made arbitrary policy changes.
- Earlier, one person could own only 2 liquor shops, but the new policy allowed up to 54 shops.
- Government-run liquor stores were reduced from 377 to zero, while private liquor vendors increased to 849, out of which only 22 private players got licenses, leading to monopoly and favoritism.
- Manufacturers were restricted to tie-up with only one wholesaler, further limiting competition.
Out of 367 registered IMFL brands, only 25 brands accounted for 70% of total liquor sales. - Three wholesalers (Indospirit, Mahadev Liquors, and Brindco) controlled 71% of the total liquor supply, which manipulated prices and reduced consumer choices.
In short, the new liquor policy created a system where a few select players benefited at the cost of public revenue, leading to huge financial losses for Delhi.