In February 2010, the Delhi government initiated the Excise Supply Chain Information Management System (ESCIMS) to combat liquor smuggling and enhance traceability. This system mandated barcoding all liquor bottles sold in the city, ensuring each bottle could be tracked from production to the point of sale (POS). The primary objective was to authenticate every bottle through barcode scanning at retail outlets, thereby preventing the circulation of illicit liquor.
A recent report by the Comptroller and Auditor General (CAG) has uncovered significant financial irregularities within the ESCIMS. The audit reveals that between December 2013 and November 2022, payments amounting to ₹24.23 crore were made for liquor bottles that were not authenticated through barcode scanning at the POS. This lapse indicates that the implementing agency received undue financial benefits, as payments were disbursed without proper verification of the barcodes.
The CAG’s “Performance Audit Report on Regulation and Supply of Liquor in Delhi,” presented to the Delhi Assembly, highlights that the implementing agency was contractually obligated to receive payments only for barcodes authenticated at the POS during sales. However, the audit found discrepancies between the number of bottles sold and those authenticated via barcode scanning. Specifically, while the total payment liability stood at ₹90.11 crore, only ₹65.88 crore corresponded to authenticated barcodes, leaving a discrepancy of ₹24.23 crore.
This discrepancy suggests that a substantial number of liquor bottles were sold without undergoing the mandated barcode authentication process. Such oversight not only undermines the project’s primary goal of ensuring traceability but also raises concerns about the potential circulation of unverified or illicit liquor in the market.
The report further indicates that despite evident issues with barcode scanning, a departmental committee recommended ad-hoc payments to the implementing agency during the initial three months of the project’s rollout. These payments included amounts for liquor bottles that lacked proper authentication. Moreover, when the matter was referred to the Finance Department, the irregularities were overlooked, and the payments were approved without addressing the underlying issues.
In April 2015, the Excise Department sought the Finance Department’s opinion on the matter and subsequently ordered a reconciliation of barcode data. However, the reconciliation process was not conducted satisfactorily, yet payments to the implementing agency continued unabated. This sequence of events points to systemic lapses in oversight and accountability within the departments responsible for enforcing the ESCIMS.
The Delhi government’s defense centered on the argument that payments were based on data captured within the system. However, the CAG dismissed this justification, emphasizing that the contract explicitly required verification of barcode data before any payments were processed. By bypassing this critical verification step, the departments not only violated contractual terms but also compromised the integrity of the liquor supply chain management system.
The implications of this oversight are multifaceted. Financially, the undue payment of ₹24.23 crore represents a significant loss to the public exchequer. From a regulatory standpoint, the failure to authenticate liquor bottles raises concerns about the effectiveness of measures put in place to curb smuggling and ensure consumer safety. The presence of unauthenticated liquor in the market could lead to health risks for consumers and undermine public trust in regulatory institutions.
This revelation comes on the heels of broader concerns regarding Delhi’s excise policies. The same CAG report estimates that the 2021-22 excise policy resulted in a cumulative revenue loss exceeding ₹2,000 crore. Such findings underscore the need for a comprehensive review of the policies and systems governing the sale and distribution of liquor in the capital.
In response to the CAG’s findings, it is imperative for the Delhi government to undertake the following actions:
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Thorough Investigation: Launch an in-depth inquiry to identify the root causes of the lapses in barcode authentication and hold accountable those responsible for the oversight.
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System Overhaul: Revamp the existing ESCIMS to incorporate more robust checks and balances, ensuring that only authenticated liquor bottles are allowed into the market.
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Policy Reassessment: Reevaluate current excise policies to address and rectify systemic issues that may lead to financial losses or regulatory failures.
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Public Assurance: Implement measures to restore public confidence, such as regular audits, transparent reporting, and consumer awareness campaigns about the importance of purchasing authenticated liquor.
The Delhi liquor barcode project was envisioned as a pioneering initiative to enhance transparency and accountability in the city’s liquor supply chain. The recent findings by the CAG serve as a stark reminder of the challenges inherent in implementing large-scale regulatory systems. Addressing these challenges with urgency and diligence is crucial to safeguarding public interest and ensuring the efficacy of such initiatives in the future.