High On Bribes & Scams: Delhi To Tamil Nadu, Why Liquor Policies Are Giving States A Bad Hangover
With no central policy or goods and services tax (GST), and full state control, the opaque liquor industry thrives on rigged licensing, tweaked policies, black money and shady political-bureaucratic-business deals
Liquor bottles have thus become perfect vessels to launder money and carry kickbacks.
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THE CASH COW NOBODY IGNORES
Excise scams have unfolded in a strategic yet eerie pattern — politicians aim to tweak policies depending on their requirements, bureaucrats execute the fix, and businessmen and liquor mafias reap the benefits.
Central agencies, including the Enforcement Directorate (ED), are currently probing at least four excise scams across states, including Delhi, Chhattisgarh, Tamil Nadu and Jharkhand. Delhi’s ex-chief minister Arvind Kejriwal and other senior cabinet ministers, including Manish Sisodia, were arrested by the ED in connection with the liquor scam; while in Chhattisgarh, the ED arrested Kawase Lakma, the state’s former-excise minister. The ED has been investigating the alleged involvement of Chhattisgarh’s ex chief minister Bhupesh Baghel and his family.
The directorate, which is also investigating the TN liquor scam, raided offices and several premises related to the Tamil Nadu State Marketing Corporation (TASMAC). In connection with the TN excise policy scam, state’s excise minister Senthil Balaji is currently under the ED scanner.
THE COCKTAIL OF CORRUPTION
Alcohol falls under the state list, which means that each state designs its own excise policy. However, this decentralisation leads to opaque licensing rules that favour select players in some states, while some states prefer frequent policy changes to accommodate political interests, as and when the ruling party changes.
The tax structure and tender process manipulation sometimes lead to artificial monopolies. For instance, the liquor policy scam (2022) in Delhi saw the Aam Aadmi Party (AAP) government introduce a new excise policy that allegedly benefited private liquor businesses in exchange for kickbacks.
Since there is no GST, direct state revenue makes liquor the most crucial power tool, making up for 15-30% of their total revenue. This gives the politicians complete control over pricing and taxation and also opportunities to rig contracts for revenue-sharing with private firms.
Liquor policies are also part of financial tools to fund elections, ensuring a constant cash flow. For instance, in Chhattisgarh’s Rs 4,000-crore liquor scam, officials and politicians were accused of running a parallel illegal liquor syndicate under government patronage, ensuring a steady flow of black money.
LICENSING, CARTELISATION & POLICY TWEAKS
Excise policies are often designed by state governments to suit the vested political and financial interests.
Policies are tweaked in exchange for election funding while some bureaucrats facilitate the deals by issuing licences and covering up irregularities. A section of businessmen monopolises distribution, manipulate pricing, and divert stock to the black market.
The Jharkhand liquor scam (2024) is a textbook example, where a liquor policy was allegedly changed to allow a single private company to dominate distribution, bypassing transparency norms.
Meanwhile, licensing and cartelisation often encourage bribery for securing retail and wholesale licences, and making cartels of select firms to control the market.
Tamil Nadu’s liquor trade, although, is entirely state-controlled through TASMAC, even within this setup, massive corruption exists in procurement and supply chains.
The Delhi excise scam investigations, meanwhile, revealed how funds were allegedly routed through shell companies to obscure illegal transactions.
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