Delhi: AAP’s cabinet note sheds light on liquor policy lessons

Deputy Chief Minister Manish Sisodia is also learnt to have asked the excise department to prepare a fresh excise policy based on the experiences of the new policy that was introduced in November last year, which aimed to privatise the liquor business and weed out corruption.

According to the cabinet note, the above observations by officials indicate that there is a need to review the new excise policy and assess whether it should continue.

The office of the L-G has alleged irregularities and corruption in the implementation of the new policy, with Saxena seeking a CBI probe into it.

According to the cabinet note, while tendering for 849 liquor shops spread across 32 zones was done, about 650 eventually opened. After shops were shut in non-conforming areas following protests by residents as well as the BJP, more licensees pulled out. This was followed by the government curtailing discounts on liquor, which was a key part of the new policy.

According to the cabinet note, nine retail licensees did not extend their licences beyond March this year. Three more conveyed their intent to not avail extension beyond July, the note said. It also said that four out of 14 wholesale licensees have also opted to discontinue their licences.

Talking about the hit to revenue, the note said that successful bidders had quoted a licence fee of Rs 8,911 crore. The revenue realisation for 2021-22 was 6,720 crore. In the first quarter of the current fiscal year, Rs 1,485 crore was realised, 37.51% below the budget estimate of Rs 2,375 crore.

The note also talks about the “blockage” of revenue because of orders passed by courts. It points to the opening of liquor shops in non-conforming wards and areas, wherein the court granted pro-rata relief on payment of license fee.

“… there has been no corresponding reduction in volume of sales, rather there was an increase in Delhi as a whole. The amount of revenue not realised on account of various court orders up to July 2022 is Rs 1,062 crore and there is a continuing shortfall of Rs 84.8 crore every month due to relief given by the High Court in non-conforming areas,” it states.

The revenue decline because of the surrendered licences is around Rs 195 crore per month, the note says.

The fact that only 468 out of a targeted 849 liquor shops are open, the note says, is leading to a large number of unserved areas and windfall gain for the licence holders that continue to operate, apart from losses for the government, it states.

Talking about discounts, several shops in Delhi started a ‘buy one, get one free’ scheme on liquor, the note states, adding that this led to unhealthy market practices, pushing out the smaller retailers who could not afford to match these offers.