Why in news?

• Delhi’s Deputy CM Manish Sisodia was arrested by the Central Bureau of Investigation (CBI) regarding the alleged irregularities in the now-scrapped Delhi excise policy.

What’s in today’s article?

• Delhi Excise Policy 2021-22 – about, features, controversy

Delhi Excise Policy 2021-22

• Also known as the new liquor policy, the Delhi Excise Policy 2021-22 was implemented on November 17, 2021.
• It changed how liquor was sold in the city — with the government withdrawing from the business and allowing only private operators to run liquor shops.
• The main aim was to improve customer experience and stop black marketing.
• However, after the whole controversy around the new excise policy, Delhi reverted to the old excise regime.

Key features of the Delhi Excise Policy 2021-22

• Under the new liquor policy, the city was divided into 32 zones inviting firms to bid on the zones.
  • Instead of individual licences, bidding was done zone-by-zone.
• Also, licenses for 849 retail vends were issued through open bidding by the Excise department in 2021.
  • Under the old liquor policy, Delhi had 864 liquor shops, including 475 run by the four government agencies, and 389 were private.
• For the first time, shops were allowed to offer discounts to retail customers and reduced the number of dry days to three from 21.
• The new policy also had a provision for home delivery of liquor. It even proposed lowering the drinking age from 25 to 21.
• It also suggested the opening of shops till 3 am. However, these were not implemented.

The controversy surrounding Delhi Excise Policy 2021-22

• Before the implementation, the policy had first to be examined by the Chief Secretary (CS) of Delhi Naresh Kumar.
• The CS allegedly found procedural lapses and irregularities in the new policy.
  • In the report, Delhi Deputy CM Sisodia, who heads the excise department, was accused of making changes to the excise policy without the approval of L-G.
• Based on the Chief Secretary’s note, the LG asked for a detailed report by the Vigilance Department.
• After reviewing the report by the Vigilance Department, the L-G suggested a CBI probe into the matter.

Main allegations in the Vigilance Department’s report (on the basis of which the CBI has built its case)

• Delhi liquor policy: Discounts, ‘1+1’ schemes
  • Hefty discounts being offered by liquor retailers were causing severe market distortions.
  • Licensees were issuing advertisements and promoting liquor and their shops through various means in violation of Delhi Excise Rules 2010.
    • The government failed to take penal action against licensees for this.
  • Undue benefits were given to liquor licensees by revising the rates of foreign liquor and removing the import pass fee of Rs 50 per case of beer.
    • This made foreign liquor and beer cheaper for retail, leading to a loss of revenue for the state exchequer.
• Number of dry days
• The new excise policy reduced the number of dry days from 21 in the 2021 calendar year to three in 2022.
• This was done without approval from the Council of Ministers, and without seeking the LG’s opinion.
• Extension of licences
  • The licences issued to liquor retailers were extended from April 1, 2022 to May 31, 2022, and then from June 1, 2022 to July 31, 2022.
  • Such extensions were allegedly given by Excise officials on their own, without any increase in the tendered licence fee.
  • This contravened an earlier proposal approved by the Council of Ministers, which said that the licence fee may be increased at the end of 2021-22 after considering the real time-based actual sale data.
  • No such exercise was undertaken by the officers of the department.
  • The extension of the licence period without an increase in fee prima facie led to undue benefit to the licensees without any justification.
• Waivers, licence fees
  • The report flagged the blanket relaxation given by the Excise Department in case of default in the payment of licence fees.
  • It said licence fees worth Rs 144.36 crore were waived in January 2022 on pretext of COVID restrictions as relief to the Liquor Cartel.
  • This was done despite the Accounts Branch of the Excise Department having specifically recommended that no compensation should be allowed to licensees.
• The link to Goa Election
  • The Enforcement Directorate (ED) accused the government in Delhi of using a part of the kickbacks from the liquor scam to fund the party’s campaign for Goa assembly election.