New Delhi: The Comptroller and Auditor General of India (CAG) report, tabled in the Delhi Assembly on Tuesday, has alleged that former Chief Minister Arvind Kejriwal and his ministers were responsible for a loss exceeding Rs 2,002 crore due to their non-transparent excise policy, widely referred to as "Liquorgate."
The audit report exposed how decision-making under the policy favored select licensees through illegal means, resulting in sub-optimal implementation and failure to achieve its key objectives. According to the findings, the excise policy failed to ensure the equitable distribution of retail liquor vends, as several outlets in non-conforming wards could not be opened. Additionally, the issuance and management of zonal licenses had serious shortcomings.
The Central government’s auditor released the report titled ‘Report of the Comptroller and Auditor General of India on Performance Audit on Regulation and Supply of Liquor in Delhi’, detailing the massive financial loss and policy failures. The excise policy scandal, which led to its eventual rollback, played a significant role in the recently concluded Delhi Assembly Elections. Prime Minister Narendra Modi had earlier vowed to expose the corrupt, declaring, “Jinhone loota hai, unhe lautana padega (The looters will have to pay back every penny).”
On Tuesday, Delhi Chief Minister Rekha Gupta tabled the CAG report amid applause from BJP legislators, while Lieutenant Governor V.K. Saxena promised to examine the findings and take corrective measures. The now-withdrawn policy had previously resulted in corruption and money-laundering charges against Kejriwal’s former cabinet colleagues, Manish Sisodia and Satyendar Jain, who spent months in jail before securing bail.
CAG Girish Chandra Murmu’s report outlined how the excise policy failed to meet its core objectives, which included optimizing revenue generation, eliminating spurious liquor sales, simplifying the excise regime, preventing cartel formation, streamlining the duty and pricing policy, and ensuring adequate distribution of retail liquor vends. The report emphasized that accountability should be established for these failures, and enforcement mechanisms must be strengthened. It was also signed by Principal Accountant General (Audit), Delhi, Aman Deep Chatha.
The CAG further revealed that crucial decisions under the policy were made without the approval of the competent authority. This included the opening of liquor vends in restricted areas such as residential neighborhoods and near places of worship or schools. Additionally, the report criticized the AAP government for providing undue relaxations to licensees, including exemptions from coercive action for non-payment of fees, reductions and waivers in license fees, refunds of earnest money deposits in the Airport Zone, and changes in the formula for determining the MRP of foreign liquor.
One of the key revelations was how the Group of Ministers (GoM), led by Manish Sisodia, deviated from the recommendations of an expert committee while drafting the new excise policy. A glaring lapse was allowing a single applicant to obtain up to 54 retail liquor licenses, contradicting the expert panel’s suggestion that an individual should be allotted a maximum of two vends.
The CAG also flagged the policy’s controversial provision that permitted retail licensees to offer discounts, a move that led to unfair competition and potential market distortions. Another critical failure was the absence of proper quality checks for liquor supplied in Delhi. The lack of dedicated testing laboratories exposed millions of residents to potential health risks.
The report accused the AAP government of lacking transparency in pricing, violating norms in the issuance and renewal of licenses, failing to penalize violators, and bypassing mandatory approvals from the Lieutenant Governor, Cabinet, and the Delhi Assembly. It estimated that the exchequer suffered a loss of approximately Rs 890 crore due to the government’s failure to re-tender surrendered liquor licenses.
Highlighting major lapses in scrutiny, the CAG pointed out that several business entities holding licenses lacked financial stability and management expertise. Instances of related entities controlling multiple segments of the liquor supply chain were also documented, raising concerns over exclusivity arrangements between zonal licensees and wholesalers. The report noted that such arrangements facilitated brand pushing, while the surrender of zonal licenses during the extended policy period led to further revenue losses.
Key planned measures, such as setting up laboratories for liquor testing, batch testing for quality assurance, and establishing premium vends, were never implemented. The policy’s shortcomings also led to an additional loss of Rs 941 crore due to exemptions granted to zonal licensees. The GoM, led by Sisodia, allegedly failed to act on expert recommendations and allowed disqualified entities to bid for licenses, further deepening the controversy.
The findings of the CAG report add to the growing scrutiny over Delhi’s excise policy and strengthen the calls for accountability in its formulation and execution.
With IANS inputs