Delhi Excise Policy case: CAG report reveals loss of Rs 2,026 crore

A Comptroller and Auditor General CAG report on the Delhi governments excise policy has revealed a revenue loss of Rs 2026 crore to the state exchequer news agency ANI reportedThe report highlighted several issues including deviations from the objectives of the Delhi Excise Policy a lack of transparency in pricing and violations in issuing licences which were not penalisedOf the Rs 2026crore loss to the state exchequer Rs 890 crore resulted from the governments failure to retender surrendered licences before the conclusion of the policy period according to the report Additionally exemptions granted to zonal licences led to a loss of Rs 941 crore ANI reportedThe Department was issuing licences without checking various requirements relating to Excise Rules and Terms and Conditions for the issue of different types of licences It was observed that licences were issued without ensuring solvency submission of audited financial statements submission of data regarding sales and wholesale price declared in other states and across the year verification of criminal antecedents from the competent authority etc the executive summary of the CAG report readThe report stated that the loss to the exchequer was primarily owing to suboptimal implementation which resulted in a failure to achieve the objectives of the Delhi Excise Policy ANI reported The report also alleges that Aam Aadmi Party AAP leaders benefited from kickbacksKey findings in the report highlight the revenue loss in crores and the ignoring of expert panel recommendations by the Group of Ministers GoMs It also noted that despite complaints all entities were allowed to bid and licences were issued without proper scrutiny Furthermore violations in the issuance of licences were not penalisedDelhi Excise Policy case Cabinet LG not consulted over important approvalsFurther selective adherence of various Rules and Regulations while issuing Licences is noncompliance of procedures and responsibility should be fixed for violations of the same the report readThe reports findings also allege that the cabinet and the Lieutenant Governor LG were not consulted over important approvals and changes In what the report claims to be a breach of procedural norms excise rules were not presented before the legislative assembly for ratificationThe report also emphasised the lack of transparency in the pricing of Indianmade foreign liquor IMFL observing that the discretion granted to the L1 licensee Manufacturer and Wholesaler allowed them to manipulate liquor prices to their own advantage by increasing the ExDistillery Price EDPPricing of liquor was important to ensure optimal excise revenue collection Excise Department allowed discretion to L1 licensee Manufacturer and Wholesaler to declare its ExDistillery Price EDP for liquor priced above a certain level All the price components after manufacture including profit of manufacturer were added thereafter Audit observed varying EDP in various States for liquor supplied by same manufacturer unit Further this discretion allowed L1 licensee to manipulate prices of liquor to its own advantage through increase in EDP the report readAnalysis of pricing and sale of a few brands revealed that discretionary EDP led to a decline in sales and consequent loss in excise revenue As the costing details were not sought to ascertain the reasonability of EDP there was a risk of L1 licensee getting compensated by the profits hidden in increased EDP it addedThe report further noted that a waiver of Rs 144 crore was granted to zonal licences based on COVID19 restrictions leading to additional revenue loss This occurred despite the tender document stating that any commercial risk would lie with the licencees with no provision for force majeureAn additional Rs 27 crore was lost due to incorrect collection of security depositsWith ANI inputs