A performance audit by the Comptroller and Auditor General on the botched new excise policy in Delhi showed why the erstwhile Arvind Kejriwal government sought to behave like an ostrich and bury its head in the sand of time. Tabled in the Delhi assembly on February 25, the report revealed how the Kejriwal administration systematically flouted its own policy formulations to benefit a chosen few. The national auditor calculated a cumulative loss of ₹2,002.68 crore to the exchequer within 10 months from November 2021, when the new excise policy was in play. This newspaper was the first to report the Delhi excise policy scam.
The auditors observed that in flagrant violation of a Delhi cabinet decision on going back to the council of ministers for approval if and when a cabinet fiat had to be amended, certain decisions that had revenue implications were taken without the cabinet’s nod and/or obtaining the opinion of the lieutenant governor. They included relaxation on coercive action against a licensee who defaults on licence fee payment, waiver/reduction in the fee, and correction in the formula for calculating the maximum retail price on foreign liquor. Besides, the amended excise rules ought to have been laid before the assembly for approval, as per the Delhi Excise Act 2009; but they were not. Nor did the AAP government file its response to any of the audit observations. The report revealed that the wholesaler margin was raised from 5 percent to 12 percent, claiming it was necessary to compensate them for setting up quality checking systems at warehouses. However, no such labs were set up. AAP’s skewed policy forced manufacturers to tie up with a few wholesalers. For example, just three wholesalers—Indospirit, Mahadev Liquors and Brindco—controlled over 71 percent of supply. These three had exclusive supply rights for 192 brands, which gave them the power to decide which brands would succeed. As a result, consumers had fewer choices, and the government lost potential revenue as competition was stifled.
All this is not just bad optics for Kejriwal’s party that lost its main calling card of probity much before it completed 10 years in public life. The CAG report’s empirical data on the dirty money stain adds to the body of evidence compiled by central law enforcement agencies to prosecute the AAP leadership. Bluster notwithstanding, Kejriwal cannot afford to dismiss the report lightly.