The Comptroller and Auditor General's (CAG) report on Delhi Liquor Policy, presented to the Delhi Assembly, reveals that a group of ministers led by then Deputy Chief Minister Manish Sisodia altered the expert panel's recommendations for the policy.

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This alteration led to significant changes, including granting wholesale licenses to private entities instead of a state-owned entity, and modifying the excise duty structure. The report highlights several deficiencies in the New Excise Policy, including ignoring expert committee suggestions, flawed license design and award, and poor policy implementation.

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CAG report

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The Comptroller and Auditor General's (CAG) report – ‘Performance Audit on Regulation and Supply of Liquor in Delhi’ – is one of the 14 reports that the Chief Minister Rekha Gupta-led Bharatiya Janata Party (BJP) government plans to table in the coming days in assembly.

A recent CAG report has exposed significant lapses in the implementation of Delhi's now-scrapped excise policy, resulting in a staggering loss of approximately Rs 2,002 crore to the exchequer.

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The GoM, the CAG alleges, decided against the panel's recommendation and allowed private players to handle wholesale liquor operations, among other violations.

‘Take control of wholesale liquor trade’

According to the report, an expert committee advised the government to take control of the wholesale liquor trade through a state-owned beverage or wholesale corporation. This recommendation was made to prevent potential conflicts of interest and illegal activities, such as those that occurred in the past when private entities controlled both wholesale and retail operations, and wholesalers allegedly facilitated the supply of illicit liquor using duplicate barcodes.

Even the GoM, in its report, accepted that many wholesalers were able to acquire retail licences through proxy ownership and make it possible to indulge in the sale of non-duty paid liquor, it said.

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“Still the GoM recommended issue of L-1 licenses to private players only. The reason provided in the GoM Report for not forming such government-owned wholesale corporation was that a deep study and implementation of the same would require time and till such time L-1 license should be granted to private players,” the report read.

“It was noted from the finally-approved Excise Policy for the year 2022-23 that the wholesale operation was proposed to be managed by private players, which belied the claims made by (Delhi) Government that private wholesale operations were only an interim measure,” the CAG report reads on page 83.

The expert committee recommended maintaining the existing system of collecting excise duty on a per-bottle basis, while proposing changes to the pricing mechanism.

"However, the GoM favoured advance collection of excise duty, in the form of License fee, which was practically delinked to the actual sale of liquor,” the report reads.

(With inputs from agencies)