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Delhi’s drinkers face a dry summer under new alcohol rules

Dinner parties in the Indian capital tend to start late and end late, sometimes stretching into the wee hours. In the posher households, the seemingly endless rounds of snacks are typically washed down with generous measures of premium booze.

But Delhi, one of India’s megacities (population more than 18mn) is running short of places to buy wine and spirits. Liquor shops are closing left and right.

The city’s local government is rolling back a liquor licensing set-up introduced last year, which liberalised alcohol sales and expanded the number of licensees. From September 1, the capital’s region will move back to an old excise regime, under which state-controlled shops will wrest back the alcohol trade until a new licensing arrangement takes effect.

In the first few days of this month, 126 liquor “vends”, as Indians call them, closed down as shop owners sought to cut their losses as licences neared expiry. By one count, the cull left Delhi with just 342 liquor shops open.

Some of Delhi’s drinkers have been flocking to stores just over state borders, such as Gurgaon, in Haryana state, or Noida, in Uttar Pradesh. “The cross-border trade is growing as we speak,” says Rajiv Singhal, editor of Fine Wine and Champagne India. “People need to consume their alcohol, and their parties can’t wait.” 

This matter might seem trivial for a country dealing with weightier issues. But Delhi’s booze bust is a sign of the perennial struggles between the states and Narendra Modi’s central government.

Attitudes towards alcohol vary widely in India: the country’s constitution mentions prohibition as a “directive principle” of the republic, though not a requirement. Some Indian states, such as Bihar and Modi’s former bailiwick Gujarat, are officially “dry”.

But while some Indian social conservatives — including in the ruling Bharatiya Janata party — eschew liquor, governments of all ideological stripes like the tax revenue from booze. The current BJP government, for example, this year signed a free trade agreement with Australia, the benefits of which include cheaper imported wine.

“The Indian state has a very unhealthy dependence on alcohol because of taxation,” says Yamini Aiyar, CEO of the centre for Policy Research, a think-tank. “And state governments have a large dependency on sin taxes, which has created a lot of perverse incentives.”

In India’s federal structure, liquor laws are set at the local level, and excise duties are collected by states. Taxes are high: a bottle of mediocre Chilean wine that might cost $8 in Europe or the US can easily set you back by Rs1,200 ($15) or more.

Delhi presents a special case. It is classified as the “national capital territory”, with its own government but a status that falls just short of an Indian state. It is run by the Aam Aadmi party (AAP), an up-and-coming opposition party. But last year the central government watered down the city administration’s powers by passing an amendment in parliament that gave supremacy to a lieutenant-governor. He has a say over how the capital region’s government conducts its business — including, apparently, how it sells booze.

In today’s liquor brawl, some facts are disputed, but at the end of July Delhi’s deputy chief minister Manish Sisodia announced a rollback of the current policy, introduced in 2021, under which both private and government-owned liquor vendors could sell alcohol.

BJP officials in central government say that the state’s revenues from alcohol went down, despite the expansion of licensed stores, and are describing what happened as a “scam” — the lieutenant-governor VK Saxena last week suspended 11 officials over what he called “serious lapses” in the implementation of excise policy.

The outcome for Delhi residents is that, for now, there are fewer places to buy liquor. Indian Express, a national newspaper, sent a reporter to comb the capital. Out of the 15 stores she visited, just two were open. Pity the bourgeois Delhi residents deprived of their tipple as they complain of having to stock up on Prosecco between flights at Terminal 3 of the airport — one of the few places it’s on sale.

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