Liquor Policy of States

Explained: Delhi Excise Policy Scam

Note4Students

From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: Delhi Excise Policy Scam

Delhi Excise Policy Scam

Central Idea

  • A Delhi court has remanded a member of Rajya Sabha in Enforcement Directorate (ED) custody in the Delhi Excise Policy Scam.
  • This has created a big furore among people over the alleged involvement of a hardliner political party which was established solely to fight political corruption.

About Delhi Excise Policy Scam

  • Background: Both individuals face corruption allegations related to the formulation and implementation of the Delhi Excise Policy 2021-22, which came into effect but was later scrapped.
  • Procedural Lapses: The allegations stemmed from a report submitted by Delhi Chief Secretary to the Lieutenant Governor in July 2022. The report pointed to procedural lapses in the policy’s formulation.
  • Financial Losses: The report claimed that “arbitrary and unilateral decisions” led to estimated “financial losses to the exchequer.”
  • Alleged Irregularities: It alleged that leaders received “kickbacks” from businesses for preferential treatment, such as discounts, license fee waivers, and relief due to disruptions caused by the Covid-19 pandemic. These funds were purportedly used for electoral influence.

Involvement of the Enforcement Directorate (ED)

  • ED’s Role: Following the CBI’s FIR, the ED asserted that the alleged proceeds of crime required investigation to establish the modus operandi.
  • Investigation Details: The ED alleged that the “scam” involved irregularities in the wholesale liquor business, margin-fixing, and receiving kickbacks. It claimed that the policy was designed with “deliberate loopholes” to benefit key figures.
  • Financial Transactions: The ED also alleged that individuals, acting as intermediaries, received substantial sums from a group, allowing them access to various businesses.

Differences in the Delhi Excise Policy

  • Policy Goals: The Delhi Excise Policy 2021-22 aimed to exit the state from the liquor business, eliminate black marketing, increase revenue, enhance consumer experiences, and ensure equitable distribution of liquor vends.
  • Private Operation: Under the policy, Delhi was divided into zones, each with liquor vends operated by private licensees. Licensees had the freedom to offer discounts and set prices.

Issues and Reversals

  • Deviation from Procedures: A report in July 2022 highlighted deviations from established procedures in the policy formulation.
  • Market Distortions: The report pointed out that discounts offered by liquor retailers were causing market distortions.
  • Policy Reversals: It noted policy reversals, leading to questions about the justification for such changes.
  • Blanket Relaxations: The report flagged blanket relaxations granted for default in license fee payments.

ED Chargesheets and Allegations

  • Campaign Funding: The ED has alleged financial improprieties related to campaign funding.
  • Conduit for Financial Transactions: Individuals are alleged to have acted as intermediaries in financial transactions.
  • Involvement of Key Figures: The ED has claimed the involvement of certain individuals in meetings and interactions related to the case.

Conclusion

  • The scam has led to arrests and legal proceedings involving corruption allegations and procedural lapses.
  • Allegations of financial improprieties and irregularities in the policy’s implementation have created a complex legal landscape.
  • The involvement of the Enforcement Directorate adds to the intricacies of the case, while ongoing investigations seek to establish the veracity of the allegations.

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