New Delhi: According to a CAG report tabled in the Delhi Assembly on Tuesday, the 2021-22 Delhi excise policy posed significant risks of monopolies and brand dominance. The report also stated that the policy resulted in a loss of ₹2,002.68 crore to the Delhi government.
The Audit observed several discrepancies in the way Excise Department monitored and regulated the supply of Liquor in NCT of Delhi. The working of Excise Department raises several questions about the way the Department is fulfilling its responsibility.
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Total financial implication of the audit findings is approximately Rs 2,026.91 crore. (A) Issues in Excise Policy for the period 2017-21 Violations in award of Licenses The Department issues several types of Licenses to Wholesalers, Retailers, Hotel, Clubs and Restaurants (HCR) etc., and annually reissues or renews the licenses.
The Audit observed that the Department could not ensure the implementation of Rule 35 of Delhi Excise Rules, 2010, which prohibits issue of multiple licenses of different category (Wholesaler, Retailer, HCR etc.) to related parties, leading to the existence of common directorship among entities holding various License Types.
The policy facilitated an “exclusive arrangement” between select wholesalers and manufacturers, allowing a few distributors to control the city’s liquor supply chain.
Shockingly, just three distributors managed to dominate over 71% of the total liquor supply in Delhi. The report further revealed that among the 367 registered IMFL brands, a mere 25 brands accounted for nearly 70% of the total liquor sales in the city.
“The policy mandated an exclusive arrangement between a manufacturer and wholesalers, which led to the entire supply of all brands of a particular manufacturer being controlled by only one wholesaler.
“This becomes particularly relevant considering the fact that although 367 IMFL brands were registered in Delhi, very few popular brands formed the bulk of sale volume,” the report said.
The CAG report, one of 14 performance reviews on the previous Aam Aadmi Party government presented by the new Rekha Gupta-led administration, revealed that the top 10 liquor brands made up 46.46% of the total sales in Delhi, while the top 25 brands accounted for 69.50% of all liquor sold.
“Of these 25 top-selling brands, Brindco and Mahadev Liquor exclusively supplied seven brands each, followed by Indospirit which exclusively supplied six brands.
Further, of the 367 brands of IMFL supplied by 13 wholesale licensees, the highest number of brands were exclusively supplied by Indospirit (76 brands), followed by Mahadev Liquors (71 brands) and Brindco (45 brands). These three wholesalers also accounted for 71.70 per cent of the volume of Liquor sold in Delhi,” it stated.
The report on the alleged liquor scam, a hot-button issue in the run-up to the elections, flagged that the 2021-22 policy had inherent design issues including the imposed exclusivity arrangement between manufacturers and wholesalers and the formation of retail zones with a minimum of 27 wards in each zone.
These issues resulted in limiting the number of total licensees and increasing the risk of monopolisation and cartel formation. It was noticed that wholesale licences for the supply of IMFL and FL were granted to 14 business entities, whereas the same was granted to 77 manufacturers of IMFL and 24 suppliers of FL in the old policy (2020-21).
“Similarly, for the purpose of retail vends, Delhi was divided into 32 zones (containing 849 vends) whose licences were granted to 22 entities through tendering, whereas, 377 retail vends were run by four government corporations and 262 retail vends were allotted to private individuals previously,” the report said.
According to the CAG report, the Group of Ministers, headed by the then deputy chief minister Manish Sisodia, had mentioned in its report that the entire liquor retail market was apparently controlled by very few people through a fraudulent proxy model.
However, it still recommended the distribution of retail licences in zones where one entity/person could get up to 54 vends (two zones). PTI