CAG report says AAP's Delhi liquor policy led to Rs 2,002 crore revenue loss

The Comptroller and Auditor General of India report on the now-scrapped Delhi liquor policy scam was tabled in the Assembly today by Chief Minister Rekha Gupta. 

A report by the Comptroller and Auditor General of India (CAG) has revealed that implementation of the now-scrapped liquor policy by the former Aam Aadmi Party-led government in Delhi resulted in an overall Rs 2,002 crore revenue loss. The report was tabled in the Delhi Assembly today by Chief Minister Rekha Gupta as AAP MLAs opposed its presentation, leading to their suspension.

The liquor policy scam, which involved massive financial irregularities in its formulation, led to the arrests of top AAP leaders, including party chief Arvind Kejriwal, his former deputy Manish Sisodia, Rajya Sabha MP Sanjay Singh and former Delhi Minister Satyendar Jain.

The newly installed BJP government in Delhi has announced that it would table all the 14 pending CAG reports during the ongoing Assembly session.

Meanwhile, the CAG report on the liquor policy, which covered a period of four years from 2017-18 to 2020-21, also revealed that the Delhi government faced a revenue loss of approximately Rs 890 crore due to failure to re-tendering surrendered licences, while delay in action led to losses worth Rs 941 crore due to exemptions granted to zonal licensees.

Some of the top irregularities mentioned in the report are as follows:

VIOLATIONS IN AWARDING LICENCES

The audit report found that the Kejriwal-led AAP government could not ensure the implementation of Rule 35 of the Delhi Excise Rules, 2010, which prohibits the issuing of multiple licences. While some retailers retained licences until the expiration of the policy, others surrendered them early.

There was also no provision for licence holders to give advance notice before surrendering, which led to supply disruptions.

Meanwhile, the government also issued licences without checking the requirements related to the Excise Terms and Conditions, the report claimed.

"It was observed that licences were issued without ensuring solvency, submission of audited financial statements and data regarding sales, and verification of criminal antecedents," it added.

LACK OF TRANSPARENCY IN PRICING IMFL

The CAG report said that after analysing the price and sale of a few Indian-made foreign liquor (IMFL) brands revealed that discretionary ex-distillery price (EDP) led to a decline in sales, as well as consequent revenue loss.

"The Excise Department allowed L1 licence holders to declare its EDP for liquor priced above a certain level. However, all the price components after manufacture, including profits of the manufacturer, were added later," the report said.

"This discretion led to the L1 licensee to manipulate price of liquor to its own advantage."

INADEQUATE QUALITY CONTROL

The report said the CAG observed a number of instances where liquor test reports were not compliant with the specifications mentioned under the Bureau of Indian Standard.

"Important test reports of water quality, harmful ingredients, heavy metal, methyl alcohol, microbiological substances were not submitted for various brands," the report said, adding that some of the tests which were conducted were not carried out by authorised labs.

"Fifty-one per cent of test reports of foreign liquor were older than a year, or the date was not mentioned," it said.