Delhi Liquor Policy Case Collapses: CBI’s Failure Explained
Image credit X @AAPDelhi
As CAG confirms ₹2,000 crore loss and K Kavitha prepares to launch a new party in Telangana, India’s premier investigation agencies face mounting questions over their inability to convert big cases into convictions
By NIRENDRA DEV
New Delhi, February 28, 2026 —There is a lesson in all of this: keep your eye on the ball — not on the player wearing the No. 10 jersey, or his hairstyle.
Under the Delhi liquor policy framed by the Kejriwal government, the city administration made a sharp departure from the norm followed in most Indian states. It exited the liquor retail business entirely, handing it over to private operators. The stated goals were straightforward: eliminate black marketing, boost government revenue, and improve the consumer experience.
The policy also permitted home delivery of liquor and allowed shops to remain open until 3 a.m. Licensees were free to offer unlimited discounts. Initially, the Delhi government reported a substantial 27 per cent jump in excise income, generating approximately ₹8,900 crore.
The CAG’s Damning Verdict
That rosy picture has since unravelled decisively. A report by the Comptroller and Auditor General (CAG), tabled in the Delhi Assembly in February 2025, concluded that the 2021-22 liquor policy caused losses exceeding ₹2,000 crore to the Delhi exchequer. The report cited serious policy lapses, procedural violations, and a pattern of ignored expert advice.
Specifically, the CAG found that then Deputy Chief Minister and Excise Minister Manish Sisodia had “disregarded key suggestions” from an expert panel while formulating the now-scrapped policy. Among the violations flagged: the Delhi Master Plan 2021 explicitly prohibited liquor vends in non-conforming municipal wards — areas not zoned for liquor sales — yet the Excise Policy 2021-22 mandated the establishment of at least two retail outlets in each ward regardless.
Tender documents, too, had clearly stated that liquor stores must not be set up in such restricted zones. Yet licences were issued before zoning concerns were resolved. On November 16, 2021, the Delhi Development Authority formally disallowed vends in non-conforming zones, forcing licensees to approach the High Court. The court subsequently exempted them from paying ₹114.50 crore per month in licence fees — compounding the government’s financial losses further.
The CAG separately estimated a revenue loss of Rs 941.53 crore attributable specifically to the failure to obtain timely permissions for opening liquor outlets in these non-conforming wards.
The Case That Could Not Survive Court
Despite the scale of the alleged irregularities, the high-profile corruption case associated with the Delhi liquor policy has now collapsed at the level of the lower court, failing to withstand judicial scrutiny. The High Court battle ahead is likely to determine the case’s future trajectory.
The broader pattern is familiar and damaging. The CBI officially claims conviction rates of 65 to 75 per cent in Prevention of Corruption Act cases — figures that project the image of a prosecutorial powerhouse. But a closer examination reveals that the bulk of these convictions involve low-level trap cases. In complex, politically significant matters — the 2G spectrum allocation, coal block allocation, Commonwealth Games contracts, and now the Delhi liquor policy probe — the agency has repeatedly failed to secure convictions.
The Enforcement Directorate presents a similar picture. Both agencies generate immediate political and media impact when they act, but their most publicised cases too often disintegrate in court. The statistics tell a misleadingly flattering story.
On the Delhi liquor case specifically: the conclusion is difficult to avoid. The CBI’s failure is humungous.
The Road to the CBI Probe
For context: the CBI’s involvement began after Delhi’s Lt. Governor V K Saxena, citing a report from the city’s top bureaucrat alleging that Sisodia had bent rules and provided undue benefits to licensees, recommended a Central Bureau of Investigation inquiry.
Saxena had been appointed in May 2022 by Home Minister Amit Shah, replacing Anil Baijal. His tenure, like Baijal’s before him, was marked by persistent friction with the Arvind Kejriwal government and the AAP administration. State BJP leaders consistently amplified the L-G’s public criticisms of the elected government.
Sisodia responded to the CBI probe by announcing the policy’s cancellation, accusing the BJP of using investigative agencies under its control to intimidate liquor vendors. He also blamed Baijal for a “last-minute change” that he claimed had crippled the policy’s intended reforms. Notably, Sisodia had not been named in the original chargesheet at the time of his arrest.
In 2022, the CBI conducted raids at 31 locations, including Sisodia’s residence. The minister maintained that nothing incriminating was found. The Enforcement Directorate pursued a parallel money laundering investigation, alleging that a liquor lobby referred to as the “South Group” paid at least ₹100 crore in kickbacks to AAP for use in its Goa election campaign.
K Kavitha: A Political Comeback Takes Shape
Meanwhile, in Telangana, Bharat Rashtra Samithi (BRS) leader K Kavitha — daughter of former Chief Minister K Chandrashekar Rao — is preparing to float a new political party, with a launch expected in May.
Kavitha, who spent months in judicial custody in connection with the Delhi liquor case before being granted bail, has signalled her intention to contest from Siddipet — long considered the stronghold of her cousin, former Minister and senior BRS leader T Harish Rao. The move is widely read as a direct political challenge within the family and the party.
Her re-entry into active politics comes at a time when the very case that had put her behind bars is now visibly faltering in court — a development that may prove to be the most consequential political booster she could have received.
Delhi Excise Case: Arvind Kejriwal in Tears after Court Discharges
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