View: Delhi's excise policy throws the baby out with the bathwater

Visualise this scenario last year, when Dilliwalas used to purchase their favourite brand of liquor from Delhi‘s government liquor stores. On reaching the barriered, cramped enclosure, through the inconvenience of the jostling crowd, customers would call out loudly across the counter for Brand X. ‘Nahi hai, saab. Sirf Y milega’ was the frequent and prompt reply, with no options put forward.

To top it all, the nudging customers in the serpentine queue forced most folks to quickly take whatever was being offered, and a super-fast transaction ensued through the rails. Even before one could ask about the price, or – for some brave souls – enquired about alternate brands, one realised that one was out of the queue, with a brand that one probably hadn’t heard of, or wanted, and had been left with no choice, officer’ or otherwise.

This isn’t a dramatic sequence from a gritty streaming show on Hotstar, Amazon Prime or Netflix. This was an experience much narrated by most liquor-shoppers in the capital city of 2021 India, Delhi.

A slice of this scenario was well captured in a survey conducted in Delhi by Local Circles in 2019. The consumer study highlights the challenges in the purchase environment that was not so conducive, with consumers indicating mismanagement and corruption at government-owned liquor vends in the city. With restricted brands available at these government vends, 68% of consumers had reported that they didn’t get their choice of brands, and 49% ended up taking whatever the vends gave them.

Further, reported instances of mismanagement and malpractices – selling above MRP (maximum retail price), no receipts provided after purchase, etc – were identified by respondents. Almost 50% of shoppers had complained of long queues and extended wait time at the government liquor shops, thereby leading to poor consumer experience. As a result, as much as 22% consumers were reported to have shifted their purchases to better placed retail outlets in Gurgaon, and at more lucrative prices, as per the study.

All this was to change with the Delhi administration proposing a new policy, steering away from the archaic 2019-20 excise policy, and introducing a promising 2021-22 excise policy. The message to all constituents of the industry was: Government has no business to be in the liquor business.

Last week, all that seems to have evaporated. Delhi government announced a U-turn, shunting out all public vendors in the state. In this ‘nationalisation’ plan in post-liberalisation India, the state government has set up a sub-committee (as governments are wont to do), which has recommended the setting up of four government corporations that would, in turn, set up 500 liquor stores by September 1 and ‘200 more’ by December 31, 2022. These will be purportedly established in separate zones, not unlike the ‘ration shops’ one was familiar with in the 1980s.

The proposed policy that has been scrapped was more progressive. It aimed at all products being more easily available and affordable by lifting restrictions on discounts. It facilitated premium outlets ushering in comfortable user experience to customers, along with a safe environment for women to buy liquor, in step with global practices.

The logic being used by the government and its sub-committee is to prevent malpractices in private vends, such as overcharging and pushing specific brands. A question to the wise policymakers: Are we not throwing out the baby with the bathwater?

The real question to ponder is: Who is going to benefit from the reversal to the old policy? The consumer is clearly going to compromised of his or her choices of alcohol-buying experience, brands, variety of offerings. Manufacturers would certainly be constrained in providing their extensive portfolio. And – how’s this for irony – the Delhi government will lose out as many consumers go back to purchasing their drinks from neighbouring Gurgaon and Noida.

Perhaps, a better solution is to bring out the best of the new policy – ensuring that malpractices don’t happen in private and government vends – and the old one – allowing market forces to provide the consumer more choice, better customer experience, and far less hassle.


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