CAG: Liquor policy violations cost Delhi Rs 2,027 crore | News of India

The report states that the pricing of alcoholic beverages is left to the discretion of the manufacturer and wholesalers, not the government.

NEW DELHI: A CAG report assessing the effectiveness of the Delhi government’s regulation and supply of liquor in the national capital between 2017-18 and 2020-21 has found several irregularities in the excise policy and its implementation, similar to findings by the CBI and ED. Thus, the CAG estimated the loss to the exchequer at Rs 2,027 crore.
The report was signed by former CAG GC Murmu in March 2024 and sent to the LG and the Delhi government. But it was not submitted by the state government. Sources confirmed the authenticity of the message. The CAG pointed out many irregularities, from granting licenses to wholesalers to appointing retailers and lack of monitoring and distribution of liquor.
The report states that the pricing of alcoholic beverages is left to the discretion of the manufacturer and wholesalers, not the government. “This discretion allowed the L1 licensee (manufacturer and wholesaler) to manipulate liquor prices for their own benefit,” the CAG said. This led to a drop in sales and losses for the budget. There was also no quality control of alcohol sold in Delhi.
Instead of end-to-end tracking of liquor sales through barcode scanning, the Excise Department has gone for post-sale inventory reconciliations, undermining inventory tracking and data accuracy. The ED and CBI claimed that the payments amounted to Rs 1,000 crore.

The auditor accused the AAP government and senior party officials of ignoring the Cabinet of Ministers when developing a new excise policy. “In violation of the Cabinet decision, the necessary approvals from the Cabinet/Lt.Governor’s opinion were not obtained before granting important exemptions/relaxations with revenue implications (in the new excise policy for 2021-2022),” the CAG said.
The CAG also noted that “the recommendations of the expert committee set up to make changes to frame the new excise policy have been ignored. These changes included the granting of a wholesale license to private individuals instead of a state wholesale organization, advance collection of excise duty in license fees instead of excise duty will be charged per bottle, the applicant is allowed to have a maximum of 54 retailers and a maximum of two vends is given instead of an individual.”
CAG: Expert panel recommendations ignored
This surfaced dramatically in political circles on Saturday, prompting the BJP to launch a scathing attack on the AAP. Contacted by TOI, government sources confirmed its authenticity.
The report said liquor prices are left to the discretion of the manufacturer and wholesalers, not the government, which was the focus of the CBI probe. “This discretion allowed the L1 licensee (manufacturer and wholesaler) to manipulate liquor prices for their own benefit,” the CAG said. This led to a drop in sales and losses to the exchequer, the report said, adding that there was no control over the quality of liquor sold in the capital.
According to the report, instead of end-to-end tracking of liquor sales through barcode scanning, the excise department went for stock reconciliation after sale, undermining stock tracking and data accuracy.
The audit also reviewed the records of the new excise policy for 2021-22. While the ED and CBI in their investigation claimed that the disbursements amounted to Rs 1,000 crore, the CAG in its findings, after evaluating the documents of the excise department, said the irregularities resulted in a total loss of Rs 2,027 crore.
“The government lost revenue of Rs 890 crore because it did not re-tender rejected retail licences,” the report said, in addition to a loss of Rs 941 crore due to exemptions granted to zonal licensees.
The AAP government has reversed the Excise Department’s decision to waive Rs 144 crore license fees to zonal licensees based on Covid restrictions (December 28, 2021 to January 27, 2022), the federal auditor said. Another Rs 27 crore in losses was due to improper collection of deposits from zonal licensees. “These problems in implementing the new policy have resulted in a revenue loss of around Rs 2,002 crore,” the auditor said.
The auditor accused the AAP government and its top officials of ignoring the cabinet while framing the new excise policy. “In violation of the Cabinet decision, the necessary approvals from the Cabinet/Lieutenant Governor’s opinion were not obtained before granting important exemptions/relaxations with revenue implications (in the new excise policy for 2021-22),” the auditor said.
The CAG also noted that “the recommendations of the expert committee formed to make changes to frame the new excise policy have been ignored.