Delhi, Punjab Liquor Policy: Monopoly Over Bacchus And ‘The Greater Good’

While Delhi has reverted to the old excise policy, liquor vends in Punjab are running full steam as per the new excise policy, despite the policy being challenged in court.

Delhi excise policy
A notice mentioning the closure of a private liquor shop put up inside the shop’s premises, in New Delhi, Saturday, July 30, 2022. (PTI Photo)

Chandigarh: Delhi and Punjab’s fast route to revenue via the new liquor policy came to a halt last month. Of late, liquor policies of both the states ruled by the Aam Aadmi Party (AAP) had been brought to an intersection where there was a common meeting ground from how they were dissimilar earlier. As some say that “for the greater common good – more revenue to the government, low-priced liquor to lakhs of consumers, at the cost of small liquor firms/contractors, who ultimately may find themselves eliminated from the system.”

While Delhi has reverted to the old excise policy, liquor vends in Punjab are running full steam as per the new excise policy, despite the policy being challenged in court.

While Delhi’s excise policy had both government and private owned liquor vends, in Punjab there were just private liquor contractors. The two Aam Aadmi Party (AAP) ruled states wanted the maximization of profits out of the sale of liquor. In Delhi, they said, due to corruption the government-run liquor vends weren’t bringing in the desired profits. In Punjab, there was a lot of black marketing from the nearby Chandigarh and Haryana, due to the private liquor contractors selling costly liquor in the state.

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While in Delhi the new excise policy is null and void, in Punjab it has been challenged in court. The petitioners, represented by senior Advocate DS Patwalia sought the quashing of the new excise policy. The counsel for the petitioners argued that the excise policy was an attempt to monopolise the liquor industry in the state in favour of a “certain handful of entities”. The petition added the new policy eliminated the interests of the “marginalised wholesalers/retailers for L-1 and L-2 licences.”

Aam Aadmi Party spokesperson said, “The new Liquor policy is in the best interest of the state to maximise the revenue and lower the liquor prices for the consumer.”

Punjab’s New Excise Policy & What It Means

Earlier, in the L1 category, which is Indian Made Foreign Liquor (IMFL) if there was a 10 per cent margin to the liquor contractor per bottle, now the margin will be 5 per cent. And the cost of an IMFL bottle will be less by the difference between the earlier margin and the new margin. So earlier, if a bottle of liquor cost Rs 2,000 to the consumer, the margin for the vend owner would be Rs 200 per bottle. Now the cost of the liquor bottle to the consumer will be brought down by asking the vend owner to just take five per cent of that margin which is Rs. 100. Thus, to the consumer, the bottle will be Rs 100 cheaper than what it was last year.

Rajwant Singh Grewal, who has been in the business for long said, ”For the customers and government it is a win-win situation but not so much for the liquor firms. The excise policy says that the government wants more revenue, the customer should also get liquor at a lower price. So who pays for it, the liquor firm or the contractor.”

Unwilling to get named, a source in the industry said, that is where the big liquor vend owners stand to benefit due to the economies of scale (expanded size of their business a benefit extended to them by the government). Let’s take a case in point of Ludhiana. Earlier, there were 150 zones in the Ludhiana municipal limits. Now there are just 36. More zones mean more liquor vend contractors.

Punjab Govt’s Fight For Extra Rs 2,500 Crore

While Punjab generated a revenue of around Rs 6,158 crore in the financial year 2021-22. In June 2022, the government issued a new excise policy for 2022-2023 operational for nine months — from July 1, 2022, to March 31, 2023. The revenue generation for the said period has been pegged at Rs 9,647.85 crore.

Delhi’s Fight For Surplus Revenue

After introducing the new liquor policy in November 2021, the Delhi government was looking at a revenue generation of Rs 10,000-crore revenue a year. Earlier, the annual revenue generation was Rs 6,500 crore.

However, despite the tall claims of the Delhi government, the excise department fell short of its target, collecting a revenue of just around Rs 1,993 crores in eight months from December 2021 to July 2021. Of course, the Delhi government blamed it on the BJP.

The new excise policy of the Delhi government has been stayed, and now it reverts to the old policy where 475 vends will be operated by the four Delhi government corporations and 389 by the private sector.

Why Did Delhi Revert To Old System

The Lieutenant Governor of Delhi, Vinai Kumar Saxena, recommended a CBI probe regarding the new excise policy of the Delhi government. Lt Governor Saxena directed Delhi’s Chief Secretary to give a detailed report about the role of officers and bureaucrats in policy formulation and execution.

The chief secretary also informed the Economic Offences Wing EOW of Delhi Police about alleged irregularities, cartelisation and monopolies in the liquor trade, and has asked the EOW to investigate.