For the past several months, the central government and the Delhi government are at loggerheads with each other regarding the alleged corruption in Delhi’s new excise policy. On Monday, the Central Bureau of Investigation (CBI) once again summoned Manish Sisodia, the Delhi Deputy Chief Minister, who also holds the excise portfolio for questioning in this regard.

In July this year, Delhi’s Lieutenant Governor Vinai Kumar Saxena ordered a CBI probe into Delhi’s excise policy 2021-22, putting Sisodia and several other government servants directly in the line of fire. Following this, the Delhi government withdrew the new liquor policy, thus putting the old liquor policy in place once again. The CBI in its first information report (FIR) named Sisodia as the prime accused in the case.

Apart from him, 16 others, including then Delhi excise commissioner Arava Gopi Krishna, the then deputy commissioner excise, and assistant commissioner (Excise) Pankaj Bhatnagar, are also named in the first information report (FIR) filed by the CBI for giving undue advantages to some prominent liquor retailers.

What's new liquor policy?

Launched in November last year, the new liquor policy aimed to augment the state’s excise duty revenue by ₹9,500 crore. The AAP government said that through the new liquor policy, the government will withdraw from selling liquor, thus giving sole power to the liquor retailers for the liquor sale.

Under the old liquor policy, of the 864 liquor shops in the state, 389 are operated by private players whereas 475 are operated by government agencies. As per the old liquor policy norms, the liquor shops are to remain shut for 21 days, and the liquor retailers are not allowed to give discounts or introduce schemes such as ‘Buy One Get One Free’ as the government mandated a maximum retail price (MRP) for liquor sell.

However, with the new liquor policy retailers were free to decide the pricing of the liquor sale.

The retailers are allowed to introduce schemes such as ‘Buy One Get One’ and home delivery of liquor. Moreover, licenced liquor retailers can open three liquor stores in each municipal ward.

Following this, as many as 800 liquor shops operated by Delhi Consumer’s Cooperative Wholesale Store (DCCWS), Delhi Tourism and Transportation Development Corporation (DTTDC), Delhi State Civil Supplies Corporation (DSCSC), and Delhi State Industrial and Infrastructure Development Corporation (DSIIDC) winded down.

While the city was divided into 32 zones with 27 vends in each zone, the liquor licenses were issued to 849 private vends. The Delhi government earlier claimed to register ₹9,000 crore as excise revenue. Sisodia earlier said, “In Delhi, our government brought a new excise policy last year. Before excise policy 2021-22, most of the liquor shops in Delhi were government-run and were mired in corruption.”

“We brought a new liquor policy to stop corruption. Before that, the government used to get around ₹6,000 crore as revenue from 850 liquor shops. But, after the new policy, our government would have got more than ₹9,000 crore with the same number of shops,” he added.

What's the furore about?

Despite registering high revenues, Delhi chief secretary’s report, which was published in July, stated severe violations in the Government of National Capital Territory of Delhi Act, 1991, Transaction of Business Rules (ToBR)-1993, Delhi Excise Act, 2009, and Delhi Excise Rules-2010.

Moreover, around 200 liquor retailers reportedly closed their businesses, citing financial losses and cut-throat competition due to new excise policy. According to the government data, of the 849 liquor shops that were given license last year under the new policy, only 464 remained open by June end. Moreover, the retailers have also cited issuance of licenses in non-confirming wards to be another reason for winding down operations. In Delhi, out of 272 wards, 100 are non-confirming. Non-confirming wards are those where the civil officials have taken action against the violations of Delhi Master Plan rules.

The retailers also alleged that the new liquor policy gave leeway to several prominent players to introduce new brands through the ‘Buy One Get One’ scheme and offer rebate of up to 40%, despite the government capping the price at 25%.

The CBI in its first information report (FIR) against Sisodia alleged the Delhi Deputy Chief Minister took decisions regarding the policy without approval from the competent authority, and extended “undue favours to the licensees’ post tender.” Notably, the enforcement directorate has also filed a case against Sisodia for violating some sections of the Prevention and Money Laundering Act (PMLA).

As per the new liquor policy, the wholesale license in the Form L-1 shall be granted to a business entity having wholesale distribution experience in the liquor trade in any state/UT in India for at least 5 years, and that these L-1 licensees "shall not own directly or indirectly any of the retail vends".

"Registration of brands and labels can be done either directly by the manufacturer or by an L-1 licensee on behalf of the manufacturer during the course of the excise year. Further, any manufacturer can also change from one L-1 licensee to any other L-1 licensee after the liquidation of the entire inventory and giving a minimum of 10 days' clear notice to the Excise Department," the new policy said.

However, the CBI has alleged that some L-1 licence holders diverted the credit notes, which were issued by retail vendors as an “undue pecuniary advantage to the public servants.”

Delhi Excise Policy controversy

Delhi excise policy row: All you need to know