What is Delhi’s new Excise policy that is making AAP govt uncomfortable?

New Delhi: The Aam Aadmi Party (AAP) government rolled out new Excise Policy and redefined the way liquor is sold in the national capital, but little it did know that it will become a thorn in its flesh and give it sleepless nights.

First, the CBI probe into the procedural lapses in Delhi’s liquor policy and now the suspension of 11 senior officials for irregularities in its implementation has only made the Delhi government uncomfortable, so much so, that it was ‘forced’ to withdraw the new policy and re-implement the previous policy.

BJP has been alleging scam in Delhi’s liquor policy, claiming that Manish Sisodia waived Rs 144.36 crore licence fee to help liquor cartel book unprecedented profits. AAP has repeatedly refuted this claim but today for the first time, Delhi Deputy CM admitted that the new excise policy resulted in loss of revenue from liquor sale.

How new policy was rolled out & what changed

The premise behind rolling out new liquor policy was to improve the experience of buying liquor in the national capital.

“The excise revenue is sub-optimal and there is potential for revenue augmentation and also providing a decent standard of customer experience commensurate to the stature of the National Capital,” Delhi Government had said in its Excise Policy document.

As per the new policy, all government operated liquor shops were closed and new private shops were opened. After this, Delhi government generated Rs 8,900 crore in revenue, which was also 27% higher than its reserve price.

As part of the new policy, the city was divided into 32 zones, each of which would have a maximum of 27 liquor vends.

What else changed was price flexibility of liquor as private operators were allowed to customize the brand as per their convenience, in a bid to lure more customers. Under such circumstances, vends would fix their own price, rather than any MRP set by the government. This was meant to uplift the experience but this only backfired as many big & swanky shops offered heavy discounts and offers like one-on-one free, thus forcing others in the vicinity to book heavy losses and eventually heading for closure.

As a result of this, the number of retail liquor stores in the city came down by around 200, as many gave up their licensees and quit the business due to “financial losses” spawned by new excise policy.

Under the new excise policy 2021-22, a total of 849 liquor store licences were issued by Delhi government but till May this year, they got reduced to just 639 stores, official figures suggested.

How shop closures happened

Under the new excise policy, each licensee had to open at least 3 stores in each municipal ward. However, out of 272 municipal wards, shops couldn’t open in 100 wards as they were not in conformity with Delhi Master Plan as per civic bodies.

Another reason was heavy discounts offered by big players. Though, the government intervened and capped discounts upto 25% but the latter didn’t relent and kept luring customers with cheap rates.

Due to some reasons, licensees in 9 out of 32 zones didn’t renew their licences this year. This despite the fact that licences of all these zones were auctioned at high rates last year.