Delhi liquor 'scam': what is Kejriwal’s crime, and are bureaucrats innocent?

It was in September 2020 that an ‘expert committee’ headed by Delhi’s excise commissioner submitted a report to overhaul the excise policy. It proposed to end the government’s monopoly on the liquor trade and hand over the entire trade to the private sector through open bidding.

The report was examined by more committees and went through a group of ministers and consultations over the next several months before receiving cabinet approval. According to media reports, the then lieutenant-governor of Delhi Anil Baijal raised several objections and suggested six changes which were addressed, and the rules amended.

The new policy received the approval of the LG and presumably the Union home ministry to which the LG is answerable, before it was notified in November 2021, enabling the auctioning of 849 liquor vends to private businessmen and cartels, giving them permission to offer discounts to buyers, allowing them to remain open until 3.00 am, as well as permitting the home delivery of liquor.

The Delhi government claimed that the new policy had led to a 27 per cent increase in excise revenue to Rs 8,900 crore, reported the New Indian Express. Wholesalers and retailers also made more money, it claimed, and the consumers had better maintained and better stocked vends to enhance their ‘buying experience’.

While the new excise policy helped the government get out of the liquor trade altogether, wholesalers paid a tax of 14 per cent on their sales in Delhi. The retail trade was wholly privatised. The government decided the number of retail locations and principalities in 32 zones, and put them up for auction.

The Hindustan Times reported that in the first auction, the government garnered Rs 5,300 crore from the more affluent 20 of the 32 zones, and Rs 3,180 crore from the remaining 12 zones. An important side benefit of the new policy, it was claimed, was that by providing easier access to licensed liquor in poor areas, it reduced the sale of illicit liquor.

The government, the HT report said, expected to garner over Rs 10,000 crore per year from the sale of liquor in the capital. This was almost double the average of Rs 5,500 crore recorded in the previous three years, and the excise revenue of Rs 5,272 crore (excluding VAT) garnered between 1 September 2022 and 31 August 2023 after the return to the old policy.

In July 2022 itself, excise minister and deputy chief minister Manish Sisodia ordered the new policy to be junked, and ordered officials to restore government monopoly over the liquor trade. This followed a report sent to the new LG by the chief secretary, who reported widespread violation of procedures, and alleged that undue benefits were being given to traders.

The Delhi government had waived off annual license fees worth Rs 144 crore owing to the Covid-19 pandemic, which was flagged by the chief secretary, besides the waiver of a fee of Rs 50 on every case of imported beer.

Sisodia withdrew the policy days after the CBI (Central Bureau of Investigation), asked by the LG to investigate, raided 31 locations, including the Sisodia residence.

A policy with an eight-month tenure now threatens to derail the Aam Aadmi Party (AAP) and the Delhi government, with virtually all its top leaders, including chief minister Arvind Kejriwal, arrested by the Enforcement Directorate (ED), which has alleged that the policy offered an exceptionally high profit margin of 12 per cent to wholesalers and nearly 185 per cent to retailers.

The ED also alleged that of the 12 per cent, 6 per cent was to be recovered from wholesalers as kickbacks for AAP leaders, and the "South Group", a cartel of traders based in Telangana/Andhra Pradesh allegedly gave Rs 100 crore in advance to another accused, Vijay Nair, who was linked to the AAP. The total proceeds of the ‘crime’, according to the ED, are Rs 600 crore.

While the role of bureaucrats in forming and implementing the policy is shrouded in mystery, the AAP is accused of receiving huge commissions, which were then used to contest elections in Punjab, Goa and Gujarat.

The only evidence against Kejriwal is said to be a statement by Hyderabad businessman Sharath Reddy, who turned approver six months after his arrest. The ED and the government may find it difficult to explain the several earlier statements by Reddy, which make no mention of Kejriwal, and also Reddy’s Rs 60 crore contribution of electoral bonds to the BJP during this period.

This has prompted the AAP to cry foul and accuse the ED of a political witch hunt at the behest of the BJP.

Even as the political slug-fest continues, questions remain unanswered. Why was the new policy junked if it was good? How is it that no bureaucrat is being held responsible for the policy and its implementation? Why did the previous LG give his approval to the policy but resign as LG in May 2022 citing personal reasons? His successor promptly referred the chief secretary’s report to the CBI for inquiry. Indeed, what was the chief secretary’s role in the implementation of the policy?