Expert committee recommends phasing out of govt’s presence in liquor business in Delhi

NEW DELHI: Minimising the presence of Delhi government in the retail sector of the liquor business and finally exiting from it has been recommended by an expert committee set up to suggest measures to augment revenue from excise duty and simplify liquor pricing.The committee set up by Deputy Chief Minister Manish Sisodia in September 2020, has also recommended that IMFL (Indian made foreign liquor) trade should be revamped by bringing the entire wholesale operations under one government entity.

The report issued by the Excise department in public domain, said the government entity should be based on the Karnataka model where the KSBCL (Karnataka State Beverages Corporation Ltd) is the fully government-owned wholesale corporation.“The Committee is of the view that the government’s presence in the retail sector should, in the first instance, be minimised and when the wholesale government corporation stabilizes in the medium term, it may be justified for the government to exit the retail sector altogether,” stated the report.

The retail licenses for private vends should also be allotted through lottery system once in every two years, recommended the panel.The retail liquor sector in Delhi is served by 720 active vends, including country liquor ones. Out of these, 60 per cent of the vends are owned by government corporations while remaining 40 per cent are privately owned.

The report noted that the revenue contribution by the government vends is almost equal to private ones despite the larger number. The average contribution per vend of the government corporation in terms of excise duty is `5 crore per annum in comparison to annual `8 crore per private vend, it said. 

A drawback in the existing retail licensing mechanism is that retail vends are automatically renewed every year on payment of a marginal fixed license fee. There is no accountability in terms of increasing revenue to government exchequer for these retail licences, it said. The total revenue generated from renewal of retail licenses in the year 2019-20 was `39.62 crore, it mentioned.

“The practice of auto-renewal of retail licenses after payment of requsite license fee has become obsolete and needs revision. It is proposed that lottery of retail licenses may be done every two years,” recommended the committee. In this regard, the auction or lottery mechanism as adopted in Haryana, UP and Rajasthan were studied by the committee. In the licence to individual model retail licenses are widely distributed in a “fair, transparent” manner among a large number of eligible individuals only. This model  envisages distributed ownership of retail vends wherein the licenses are periodically re-distributed through a “transparent” selection process, said the report. 

“In terms of revenue augmentation potential, this model brings in a huge amount of revenue by way of non-refundable application fee alone, many applications are put in by potential licensees,” it noted.

With PTI inputs