Kavitha slams BJP for linking her to Delhi liquor scam, to sue BJP leaders who made allegation

The BJP’s allegations

Amidst strained relations between the ruling BJP at the Centre and the TRS in Telangana, BJP leaders had on Sunday, dragged the family of KCR into the scandal, alleging that Kavitha had a role in the scam.

At a press conference in Delhi, BJP MP Parvesh Varma and former legislator Manjinder Singh linked Kavitha with liquor businessman Arun Ramachandran Pillai, who was raided by the CBI in Hyderabad a few days ago.

According to them, using multiple connections, Kavitha and her associates influenced the tweaking of the liquor policy for financial gains, as a part of which AAP No. 2 Manish Sisodia was allegedly paid off.

Pillai, based out of Bengaluru but a Canadian citizen, is a director in Robin Distilleries and Robin Distribution Pvt Ltd, both set up in Hyderabad, but only in April this year.

Kavitha has announced she will file defamation cases against Varma and Manjinder Singh.

BJP trying coercive tactics: Kavitha

In her sharp reaction to the charges made by the BJP, Kavitha said that it appeared the party was trying to coerce Chief Minister KCR into submission as he has been very vocal in criticising the Centre, by making allegations against her.

“If this is the case, it is not going to work. When we were fighting for Telangana several allegations were made against us. But nothing came out of it. We are a family of fighters. We fought for Telangana. You cannot put us down with baseless allegations,” she said.

Links to AP and Telangana

Meanwhile, politicians from both the Telugu states, a big corporate group, and those with interests in the media are said to be among the long list of entities and lobbyists who reportedly influenced the AAP government in Delhi into tweaking its liquor policy and, thereby, allegedly causing a loss to the exchequer.

A key name that has emerged is that of liquor businessman Arun Ramachandran Pillai, who was raided by the CBI in Hyderabad a few days ago.

Associates of another businessman from Andhra Pradesh, belonging to a political family and with interests in the media, are also said to be on the radar.

CBI sources said Arjun Pandey, one of the accused named in the FIR, has links with members of the top management of the media group, whose connections with AAP are also being looked into.

YSRCP politicians under scanner

On the political front, while YSRCP MP Magunta Srinivasulu Reddy’s name has already come out as having invested via Magunta Agro Farms Pvt Ltd, another firm, Avantika Contractors (I) Ltd, is also being linked to YSRCP leaders from Andhra Pradesh.

According to Andhra Jyothy, a language newspaper which comes out in the two Telugu states, a pharma major of Hyderabad, Aurobindo Pharma, reportedly made investments towards the Earnest Money Deposit on behalf of those involved in the liquor business through an arm named Trident.

Magunta Reddy has a stake in Balaji Distilleries and is a bottler for one of the world’s largest liquor companies, Pernod Ricard.

How it all worked

One of the key allegations that the CBI would be looking into is how large liquor manufacturers gave huge discounts and rebates to select retailers who killed the competition by resorting to predatory pricing.

The Delhi government’s new policy, implemented in November 2021, allowed manufacturers and wholesalers to pick and choose retailers while offering rebates and discounts. The old policy mandated equal treatment of all retailers.

But the new policy overturned it. As a result, some retailers received such huge discounts that they were able to offer buy-one-get-one-free schemes.

The retailers who did not receive the generous discounts and rebates from manufacturers and wholesalers competed with the others for some time but eventually capitulated.

With the new policy leading to an unfair advantage for some retailers, a large number of retailers who did not receive discounts started surrendering their licenses. This return of license left large parts of Delhi unserved.

Windfall profits to some retailers

The government, instead of re-auctioning the surrendered zones, allowed the existing retailers to reap a windfall profit as consumers from surrendered zones flocked to the ones that were still operating.

Out of Delhi’s 32 zones, retailers of four zones returned their licenses on March 31, five on May 31, one on July 15, and nine on July 31. As of now, only 13 zones are operating in Delhi.

The new policy also shifted the government’s revenue model from excise duty to license fees.

Under the old policy, the government used to earn revenue through excise duty on the sale amount. In the new policy, the government made the excise duty negligible at one percent of the sale amount, and instead imposed a license fee of Rs 300 crore per annum for every retailing zone.

When a large number of retailers pulled down their shutters, the others still operating made a huge killing.
While the sale of liquor remained high, the government earnings were reduced drastically due to the loss of license fees of the closed retailing zones.

Not surprisingly, the state government’s excise revenue saw a sharp drop.

Lt Gov initiated vigilance probe

The lopsided implementation of the new policy, which denied a level playing field to all players, resulted in complaints being lodged with the CBI as well as the Lieutenant Governor of Delhi.

The Lt Governor initiated a vigilance department probe which prima facie established Sisodia’s irregular actions. Following the vigilance department’s findings, the Lt Governor handed over the probe to the CBI. The CBI has raided Sisodia and more raids are likely on other players.

Where Telangana and Andhra Pradesh are concerned, the key question that will be asked in the coming days is whether the liquor businessman Arun Ramachandran Pillai is the link that connects the two Telugu states and the Delhi liquor scam.