The Comptroller and Auditor General (CAG) Report No. 1 of 2024 on the Regulation and Supply of Liquor in Delhi provides an in-depth performance audit of the Delhi Excise Department and highlights several irregularities, policy failures, financial mismanagement, and regulatory lapses in the handling of liquor distribution and revenue collection in the National Capital Territory of Delhi (NCTD).
Key Findings from the CAG Report:
1. Major Financial Implications
- Total Financial Impact: ₹2,026.91 crore in revenue losses and irregularities.
- Excise Policy 2021-22 issues alone resulted in ₹2,002.68 crore revenue loss, including:
- ₹941.53 crore loss due to failure to obtain timely permissions.
- ₹890.15 crore loss due to failure in re-tendering surrendered zones.
- ₹144 crore loss due to irregular COVID-related waivers to zonal licensees.
- ₹27 crore loss due to incorrect security deposit collection.
2. Excise Supply Chain Information Management System (ESCIMS) Failures
- The barcode-based liquor tracking system (ESCIMS) failed in end-to-end tracking of liquor.
- 28.29% of liquor bottles sold between 2017-2021 were not scanned, making them vulnerable to illegal sales.
- Unused barcodes (₹44.64 crore generated but unaccounted) posed a high risk of misuse for selling non-duty paid liquor.
- Data Analytics & AI not used: The system failed to identify repeated violators or detect illegal sales patterns.
- Enforcement Module Not Used: The Excise Intelligence Bureau (EIB) module in ESCIMS was completely non-functional.
- Undue benefit of ₹24.23 crore was granted to TCS, the ESCIMS implementing agency, due to payments made for unauthenticated barcodes.
3. Irregularities in Liquor Licensing Process
- Multiple licenses issued to related parties (common directors, ownership links) violating Rule 35 of Delhi Excise Rules, 2010.
- Licenses issued without checking solvency, audited financial statements, criminal antecedents, or government dues clearance.
- License renewals were done without verifying employees working under licensees.
- Several licenses granted without mandatory fire and natural hazard insurance.
- L1F license irregularities: Issued without submission of sales data and wholesale price reports.
- Brand-specific irregularities: Example: Baltika 9 Beer license was granted irregularly.
4. Pricing Manipulations & Loss of Revenue
- Excise Department failed to regulate pricing of IMFL and FL.
- Discretionary profit margins allowed for foreign liquor licensees.
- Ex-Distillery Price (EDP) & Ex-Brewery Price (EBP) varied across states, leading to possible overpricing.
- Absence of cost sheets & transparency led to potential revenue loss.
- Risk of cartelization due to control of pricing by select wholesalers.
5. Quality Control Lapses
- Excise Department accepted invalid quality test certificates for liquor brands.
- 51% of test reports checked were outdated, missing, or non-compliant with BIS and FSSAI standards.
- Some liquor brands were issued licenses despite non-compliance with mandatory quality norms.
- Foreign Liquor (L1F) licenses were issued without proper testing, increasing the risk of substandard or harmful products.
6. Enforcement Weaknesses & Ineffective Excise Intelligence Bureau (EIB)
- Lack of planning in enforcement actions: No proper inspection procedures in place.
- Selective enforcement: Some violations were ignored, and inspections were discretionary.
- Repeated violators were not penalized adequately.
- Country liquor smuggling increased due to weak supply chain controls.
- Enforcement data was fragmented and lacked analytical value.
- No digital tracking of enforcement actions: Inspections and reports were manually maintained, reducing effectiveness.
7. Excise Policy 2021-22 Issues & Losses
- Excise policy implementation led to a revenue loss of ₹2,002 crore.
- Policy was designed to eliminate monopolies, but instead facilitated cartelization.
- Number of wholesale licensees reduced from 77 (2020-21) to just 14 (2021-22), increasing risk of monopoly.
- Retail licenses were limited, creating artificial supply constraints.
- Loss of ₹890 crore due to failure in re-tendering surrendered zones.
- Incorrectly collected security deposits led to ₹27 crore in revenue loss.
- Waivers worth ₹144 crore were granted arbitrarily due to COVID.
8. Additional Issues
- Failure to set up liquor testing laboratories for quality control.
- Failure to implement Excise Adhesive Labels, which were meant to enhance security.
- Non-compliance with Service Level Agreements (SLA) by TCS, yet no penalties were imposed.
- Critical posts like Deputy Commissioner (Wholesale Operations) were left vacant, affecting regulation.
Final Conclusion:
- The Delhi Excise Department suffered from severe governance failures, financial mismanagement, regulatory weaknesses, and enforcement lapses.
- ESCIMS failed in its purpose, and barcode misuse was a major risk for illegal liquor trade.
- Licenses were issued irregularly, creating monopolies and leading to cartel-like behavior in liquor distribution.
- The Excise Policy 2021-22 was mismanaged, leading to massive revenue losses.
This CAG Report exposes deep-rooted issues in liquor regulation in Delhi. It highlights how poor implementation of the Excise Policy 2021-22, weak enforcement, pricing irregularities, and licensing malpractices have led to significant financial losses. The findings demand urgent corrective measures to improve governance, transparency, and accountability in the Delhi liquor trade.
Disclaimer: This article has been analyzed and structured with insights provided by ChatGPT, an AI-powered assistant. While every effort has been made to ensure accuracy and relevance, readers are advised to cross-check facts with official sources for the most updated information.
