Exorbitant pricing structures have emerged as the focus of scrutiny following the release of the Comptroller and Auditor General (CAG) report on the Delhi Excise Policy, leading to significantly inflated liquor prices across the capital and raising alarms among consumers and officials alike.
The report, tabled by newly elected Chief Minister Rekha Gupta, has uncovered disturbing practices among foreign liquor wholesalers, identified as L1F licensees, who exercised excessive control over their pricing structures. This alarming level of discretion allowed some wholesalers to set profit margins as shockingly high as 347%, which led to inflated maximum retail prices (MRP) for consumers throughout the city.
According to the CAG report, profit margins for three randomly selected L1F licensees varied significantly, ranging from 44% to 347% of the landed price of liquor over several fiscal years. Notably, between 2017 and 2021, the average profit margins reported were 255%, 243%, 169%, and 172% during the years 2017-18, 2018-19, 2019-20, and 2020-21 respectively. What’s more, the report notes, this was happening within the framework of very low import costs, leading to consumer prices soaring unnecessarily.
The findings have prompted serious concerns, particularly as they indicate systemic flaws within the previous government's price-setting policy, which reportedly encouraged smuggling from states with lower liquor prices. This was highlighted by the Ravi Dhawan Committee established by the GNCTD (Government of the National Capital Territory Delhi) for recommending reforms to the Excise Policy.
Despite established rules mandATING transparency, the previous Arvind Kejriwal-led government reportedly failed to enforce them adequately. The CAG report details how 51% of foreign liquor test cases revealed issues with either missing documentation or test reports older than one year, raising questions over the quality of liquor being supplied to consumers. Notably, one case even involved the acceptance of a test report more than nine years old by the Excise Department.
Further compounding the issue are findings indicating conflicts of interest within the industry. The report noted over 58% of the Quality Compliance Reports had come from the licensees' own laboratories or related companies rather than independent, third-party labs. This raises serious doubts about the accuracy and legitimacy of the compliance records, thereby questioning the quality assurance of the liquor consumers were purchasing.
“The excessive pricing tactics and lack of proper oversight can lead to consumers paying far more than they should for their liquor,” said Gupta. It’s clear the faults identified have direct repercussions for consumers, many of whom are likely unaware of such extensive markups.
With these revelations now public, it remains to be seen what steps the new administration will take to rectify these issues and restore some level of fairness to the spirits market. Experts believe it is imperative for the current government to set stricter regulations and enforce compliance to curb rampant inflationary practices before they escalate any more.
The CAG report provides clear evidence of mismanagement, and calls for immediate reforms within the Excise Policy framework across Delhi. The fears of skyrocketing prices have not only led to public outcry but also impacted the credibility of the AAP, which was founded on principles of transparency and accountability.
Now, with the door opened on these systematic issues, will the government act quickly enough to establish some order, or will consumers continue to face empty shelves alongside empty wallets?
Beyond just liquor, these types of internal discrepancies have broader implications, offering insights to other sectors where similar governance failures may also exist. The report could ignite much-needed discussions on transparency and economic fairness across the board.
Meanwhile, liquor consumers are undoubtedly caught at the intersection of profit-driven agendas and government oversight failures. Without decisive action, they may continue to experience the sting of inflated prices due to unchecked markup strategies under the previous administration.
“We need true accountability and transparency, not just empty promises,” Gupta concluded, stressing the importance of addressing these significant price increases effectively and urgently.