Opinion Rolling back new liquor policy in Delhi, reverting to old regime where govt dominates sale of liquor, is a bad idea

The Delhi government’s flip-flops on liquor are detrimental to the policy credibility of the government. In 2020, the government proposed a new liquor policy and by November 2021, it came into effect. On the face of it, the new policy made a lot of sense. It took the government out of the business of selling liquor and opened up space for private sector vendors to provide this service. Selling liquor is not a strategic enterprise and should ideally be dominated by private sector players. According to the government, this reform was aimed at ending the liquor mafia and black marketing apart from increasing government revenues and improving customer experience. The new policy also provided greater flexibility to private vendors to offer discounts and compete in the market to attract customers. Reportedly, this new policy led to the government’s revenue increasing by 27 per cent.

The story seemed to turn sour, however, when the Economic Offences Wing of Delhi Police started investigating allegations of irregularities and corruption in the disbursal of liquor licenses. It was alleged that the Delhi government gave out “illegal” licences to companies that violated the terms and conditions of the excise policy. Manish Sisodia, the minister in charge, was accused of implementing this policy without the approval of the Lieutenant Governor of Delhi, and providing waivers and undue benefits to new licensees. The Delhi government, it was alleged, had revised the rates of foreign liquor (making them cheaper) and removed the levy of import pass fee of 50 per case of beer, and such decisions, it was said, resulted in a loss of revenue to the state exchequer. As the investigations began, the Delhi government, in an unwise and knee-jerk reaction, overturned its policy and rolled back to the old regime where the government used to dominate the sale of liquor.

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This has not just inconvenienced customers but also left the private vendors high and dry. There are, at present, 468 private vendors in Delhi — each employing an array of workers such as salesmen, sanitation staff, security guards and managers. A summary policy reversal means all of them will lose their jobs for no fault of their own. Those who are lucky enough to migrate to a government outlet will likely see a sharp mark down in their salaries. This is apart from the loss to entrepreneurs who spent upwards of Rs 250 crore to acquire the licence of a zonal vendor, which does not include the nearly Rs 25 crore that it could take to set up the actual shop. 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 questions that the government can ill afford to ignore.