The Delhi government’s flip-flops on alcohol are damaging the government’s political credibility. In 2020 the government proposed a new liquor policy and in November 2021 it came into effect. On the face of it, the new policy made a lot of sense. He took the government out of the sale of alcohol and opened up space for private sector vendors to provide this service. The sale of alcohol is not a strategic business and should ideally be dominated by private sector players. According to the government, this reform aimed to end the alcohol mafia and the black market, in addition to increasing government revenues and improving the customer experience. The new policy also provided greater flexibility for private suppliers to offer discounts and compete in the market to attract customers. Reportedly, this new policy resulted in a 27% increase in government revenue.
The story seemed to turn sour, however, when the Economic Crimes Wing of the Delhi Police began investigating allegations of irregularities and corruption in the disbursement of liquor licenses. It has been alleged that the Delhi government granted ‘illegal’ licenses to companies which violated the terms and conditions of the excise policy. Manish Sisodia, the responsible minister, was accused of implementing the policy without the approval of the Lieutenant Governor of Delhi and granting waivers and undue benefits to new licensees. The Delhi government, it was alleged, had revised foreign liquor tariffs (making them cheaper) and abolished the import duty of 50 per case of beer, and such decisions, – it is said, resulted in a loss of revenue for the Treasury. As the investigations began, the Delhi government, in a reckless and knee-jerk reaction, reversed its policy and reverted to the old regime where the government dominated the sale of alcohol.
This not only inconvenienced customers, but also left private sellers dry. There are, at present, 468 private vendors in Delhi – each employing a range of workers such as vendors, sanitation staff, security guards and managers. A summary policy reversal means that all will lose their jobs through no fault of their own. Those lucky enough to migrate to a government outlet will likely see a sharp drop in wages. This is apart from the loss suffered by contractors who spent over Rs 250 crore to acquire the license of a zonal vendor, which does not include the nearly Rs 25 crore it might take to set up the current store. This raises two questions: who pays for these losses? Why would anyone invest in a state where government policy can change overnight? These are important issues that the government cannot afford to ignore.