The Chief Minister of Delhi, Arvind Kejriwal, was arrested by the Enforcement Directorate on 21 March 2024 on charges of corruption and money laundering, related to the Delhi government’s liquor policy. Thereafter, the CM didn’t get relief from any judicial office including the Delhi High Court, and he decided to withdraw his application from the Supreme Court for reasons best known to him.
Though Congress has been critical of Kejriwal’s alleged corruption earlier, the party has now chosen to support him, calling his arrest an attack on democracy. Since Lok Sabha elections are around the corner, Kejriwal is an important leader, and his party is in power in two important states, his arrest assumes special political significance. Some may view his arrest as unwarranted, while others believe it may boomerang on the present central government. Kejriwal may garner people’s sympathy but the question remains, is his arrest legitimate?
Second, what is this liquor policy that landed both Kejriwal and his lieutenant Manish Sisodia in jail?
Third, what are the allegations of graft in the excise policy and its operations? Fourth, why is Kejriwal not getting any sympathy from the general public, despite the huge hue and cry from his party cadre?
This article makes an attempt to decipher New Delhi excise policy 2021-2022 on liquor and its objectionable points. At the outset, it would be interesting to note that the said policy was withdrawn within one year of its existence, not by the judiciary or any central agency but by the Kejriwal government itself. Since then, doubts have been raised regarding the integrity associated with the policy.
What is the liquor policy?
Prior to the introduction of the excise policy, liquor was sold at retail by both government-run outlets and private shops. Excise duty and Value Added Tax (VAT) were collected for the liquor sold. It’s worth noting that excise duty and VAT on liquor fall under the jurisdiction of the state government. In this case, it was the Kejriwal government.
Under the said policy, areas of Delhi were categorised into 32 zones, each comprising eight to 10 wards, with about 27 outlets in each ward. This meant two to three liquor vendors were operating in every municipal ward. The new excise policy envisaged 849 spacious and air-conditioned liquor vends distributed evenly across 32 zones in the city.
An important argument legitimising the policy was that it would give consumers a “pleasant experience in buying liquor” in air-conditioned shops, making the process easier without the need to stand in long queues.
The excise policy expected a total revenue of about Rs 10,000 crore through the auction of licences of the 32 zones. This was nearly double the average revenue of Rs 5,500 crores from the past three years. Before the excise policy, Delhi used to sell 12 to 13 lakh bottles of liquor on average. When the new policy was introduced, excise and VAT were reduced to 1 per cent each, and licences were auctioned. The Delhi government decided to exit the business of liquor retailing, allowing licensed vendors to sell any number of bottles to maximise profits. As a result, licensed companies started giving heavy discounts of up to 50 per cent and even had “sales” with buy-one-get-one-free schemes. The sale of liquor started booming, with more shops opening in malls.
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Controversial wholesalers licence, commission
The new excise policy allowed a 12 per cent commission to wholesalers instead of the old quota of 5 per cent, reducing the profits of retailers. This forced retailers to surrender their licences, shut down their businesses and file legal action against the government. Perhaps, the increased commission for wholesalers led to the failure of the policy, ultimately resulting in the imprisonment of Sisodia and Kejriwal.
Critics alleged that the new excise policy had been drafted and implemented with the sole intention of creating a monopoly in the liquor market. It appeared to be tailor-made for a few select wholesalers, as one of the eligibility conditions for bidding for a wholesaler’s license required a minimum annual sale of Rs 150 crore during the previous three years, eliminating small players who had previously held licenses from the bidding process. The new policy granted a handful of wholesalers, who were offering brands of ‘Pernod Ricard India Pvt Ltd’ and ‘Diageo India’, significant control over the supply to retail vendors and discounts to be offered. Additionally, the high fixed profit margin of 12 per cent protected the wholesalers’ interest but squeezed out the retailers.
This illogical and surprising margin for wholesalers became the major drawback of the excise policy for liquor and dealt a major political blow to Kejriwal and his Aam Aadmi Party (AAP).
The government also suffered huge revenue loss and ultimately withdrew the policy. This encouraged the critics to raise concerns.
After Lieutenant Governor, VK Saxena, ordered the probe into the controversial policy, wholesalers were found to be ‘re-imbursing’ their profits to the decision makers. According to the ED’s investigation, around Rs 100 crore was paid to the AAP. This is the point where the ED has rested its case and sought custody of Delhi’s deputy CM and later Kejriwal.
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Ethical questions
Regarding corruption, investigating agencies are already on the case. However, it’s the questions around ethics on which Kejriwal may not be able to absolve himself. His mentor, the Gandhian leader Anna Hazare, has already criticised him for his liquor policy and justified his arrest. He complains that, as his disciple, Kejriwal raised his voice against liquor but is now been arrested for implementing a liquor policy, which, according to Hazare, is fitting.
Prohibition of intoxicating drinks is one of the Directive Principles of State Policy in our Constitution. Some states have even introduced a complete ban, including Gujrat and Bihar. CM Nitish Kumar has earned good fame in Bihar as this step has relieved families, especially women, from the curse of liquor.
Even in other states, high excise duty is imposed on liquor, and its objective is never to generate a big revenue. Instead, it aims to discourage the consumption of liquor. Before the Delhi government’s policy to “eliminate the liquor mafia, and enhance consumer experiences visiting new outlets”, we have seldom seen such initiatives. Many “dry days” are also announced to discourage liquor consumption on those specific days.
However, by not giving a damn to the Directive Principles of State Policy, Kejriwal announced a liquor policy that not only facilitated the purchase of liquor but also extended the operating hours of liquor shops till 3 AM, and in many cases, introduced home delivery services. Moreover, heavy discounts were offered and schemes like ‘Buy-One-Get-One-Free’ further encouraged consumption.
This act has not only hurt Kejriwal’s guru and mentor, Hazare, but has also gone against the Directive Principles. It has also encouraged the consumption of liquor, making life difficult for poor women, whose share of food was eaten up by liquor companies. More unfortunately, this has been done in the name of modernisation and increasing government revenue, which ultimately fosters corruption.
It seems that Arvind Kejriwal has no right to stand and say that he is a victim of political vendetta, as he has no moral ground to say so.
Ashwani Mahajan is a professor at PGDAV College, University of Delhi. He tweets @ashwani_mahajan. Views are personal.
(Edited by Ratan Priya)
Don’t you think consumption of alcohol has nothing to do with a single state policy. Take the example of bihar. They have a law against alcohol consumption. But still people are consuming it. New liquor Mafia has come in place.
So people who wants to drink will drink. You can’t blame this on govt.
What the point of arrest?? Let the trail take it course. If they have evidence they will present it in court and court will convict the culprits.
Arresting someone and denying them bail is not correct. Let the case go on trail.
Secondly ED Conviction rate is one of the worst among central agency. .. rest every one can understand
ED is a failed organization out of 6500+ odd cases over period of 10 years only 24 have completed trial. ED is usurping the citizens right by misusing provisions under law to be used with persons of flight danger.
Is Govt job selling liquor or administering state. What’s wrong in auctioning licenses.
Monopoly in the liquor market is bad but monopoly in selling imported coal to 3 times the price to ntpc by removing COAL INDIA LIMITED by ONLY ADANI is NOT monopoly, ED does’ent even blink eye on that.
JOURNALISTS HAVE BECOME BJP LICKERS.
Arvind kejriwal has transformed himself as the God of liquor.