In 2021, Yogi Adityanath said in Mathura... "...there should be no consumption of alcohol and meat in this area." This year too, he banned alcohol in Ayodhya. "Alcohol sales will be completely banned in Ayodhya." But this is just one story of Uttar Pradesh. The second story is that the Uttar Pradesh government loves alcohol. Many years ago, Uttar Pradesh was known for its small liquor stores, where life-threatening liquor was sold. While in Delhi, there were luxurious stores where imported whisk
y was sold. But now, Uttar Pradesh has become the capital of liquor sales. So how did Yogi Adityanath do this? With a new excise policy. You can see its impact on the ground level. Because of alcohol, last year, the Uttar Pradesh government earned the highest excise revenue in the country. In just 5 years, the state's excise revenue tripled. Some Uttar Pradesh officials said, the chief minister doesn't like alcohol, but he does like the revenue of alcohol. So this monk loves the old monk's reven
ue. This is Kalpana Agarwal. She's from Gwalior, but today, she's considered the liquor queen of Indirapuram, Ghaziabad. Before COVID, she found out about Uttar Pradesh's new liquor policy. When she was stuck in Ghaziabad during the lockdown, she thought of opening a new liquor store. This store is very successful. But you won't believe that 25% of Uttar Pradesh's liquor business is run by women. Because of such businesses, the UP government's revenue has also gone up. And the government is able
to do many things. For example, this year, the Uttar Pradesh government's budget is 10% more than last year. And the government is able to spend more on infrastructure and social welfare schemes. So what's so special about Yogi Adityanath's policy that the alcohol revenue has increased so much? To understand this, you'll have to know who Ponty Chadha is. Why am I talking about Ponty Chadha? Because Uttar Pradesh's new liquor policy ensures that there's no new Ponty Chadha. Once upon a time, Pon
ty Chadha, or Sardar Gurdeep Singh Chadha, had a monopoly on Uttar Pradesh's 14,000 crore liquor trade. In the entire state, he had 57 godowns that supplied 5,000 liquor shops. He was so influential that it was believed that he could predict the state's elections. He had so many customers in his thousands of shops that he could predict who was the favourite candidate. He wasn't just a liquor trader, but a real estate developer, sugar mill owner, coca-cola bottler, financer of Bollywood movies, a
nd hockey team owner. So who is Ponty Chadha? Ponty Chadha's father, Kulwant Singh, came to Uttarakhand from Pakistan after the partition. From Uttarakhand, he went to Muradabad, where he started selling fritters outside a liquor shop. His son, Ponty, also helped him in this shop. At a young age, Ponty had a major accident. He was flying a kite, but the kite got stuck on a high-voltage electricity line. After which he became partially handicapped. One hand and two fingers of the other hand stopp
ed working. After some time, his father got an alcohol license in Muradabad. Both the father and son started working in the same business. Ponty Chadha got a big break, when he was given a license to sell alcohol in Punjab by the BJP Akali government. Because at that time, Punjab had a monopoly of the Garcha Brothers. The BJP Akali government wanted Ponty Chadha to break this monopoly. After some time, the government in Punjab changed. But many Sikh leaders in Delhi, who were in the Delhi Sikh G
urdwara Management Committee, introduced Ponty Chadha to Punjab's Congress minister. This started his alcohol empire. Ponty Chadha then launched his business in Uttar Pradesh. You must have understood that to run a business like this, you need good connections with political leaders. But if you can predict who will be the next powerful leader in your area, then it will definitely benefit your business. This is what happened to Ponty Chadha when he realized that Mayawati's government was going to
be formed in Uttar Pradesh. Because of this, when Mayawati didn't get any support, Ponty Chadha started building a relationship with her. So after 1995, when Mayawati became the Chief Minister of Uttar Pradesh, Ponty Chadha's business started growing in Uttar Pradesh. But there was a speed breaker in this business in 1999. When Rajnath Singh became the Chief Minister of Uttar Pradesh, he changed the liquor policy. He introduced a lottery system. I'll tell you what a lottery system is in a while
. But you should know that because of the lottery system, no businessman could build a monopoly. So Ponty Chadha wanted to change this. Thankfully, the government changed again in 2003. This time, it was Mulayam Singh Yadav who became the Chief Minister. Everyone knew that Ponty Singh Chadha was a loyal follower of Mayawati. Ponty Chadha changed this too very quickly. In fact, Mulayam Singh Yadav gave Ponty Chadha the contract to supply mid-day meals to the entire Uttar Pradesh. But Ponty Chadha
's liquor business shot up when the government changed again in Uttar Pradesh and Mayawati became the new Chief Minister. When she became the Chief Minister in 2007, Ponty Chadha became very close to a bureaucrat who was a loyal follower of Mayawati. With the help of this bureaucrat, Ponty Chadha changed the liquor policy which benefitted him. In 2008, the Mayawati government created several special excise zones in western UP. In Bareilly, Muradabad, Meerut, Saharanpur, and Agra. All these excis
e zones were given to Ponty Chadha. This meant that western UP was now under Ponty Chadha's control. There were four players in the alcohol supply chain. A manufacturer who makes the liquor. A wholesaler or distributor who delivers the liquor to other areas. A retailer who finally sells the liquor. And the fourth player is the consumer who buys the liquor. With these special excise zones, Ponty Chadha was given an exclusive wholesaler's license in the entire western UP. Even though there were no
special excise zones in the eastern UP, Ponty Chadha joined hands with other industrialists like Badri Prasad Jaiswal, Har Prasad Jaiswal, and Tilak Raj Sharma. So, directly or indirectly, Ponty Chadha was controlling the entire liquor business in UP. And not a single bottle could move in the state without his approval. Remember, we're talking about UP, India's largest state. So, Ponty Chadha created a monopoly in wholesale trade. Now, when a monopoly is created in wholesale trade, Ponty Chadha
takes profit from both the manufacturer and the retailer. Because there was a monopoly in the supply chain, it also meant that the consumer had to spend a lot of money to buy a bottle. This situation worsened because Ponty Chadha didn't just enter the wholesale trade, but also the retail trade. Ponty Chadha was the owner of 40% of the retail shops in UP. So, if you wanted to buy a bottle of liquor in UP, you had to pay an extra ₹5-15 for MRP. This was public knowledge. It was called Mayawati Ta
x or Mayaprasad. This allowed Ponty Chadha to earn another ₹1,000 crores. Imagine, a bottle worth more than MRP was being sold in the entire state. When Ponty Chadha created a monopoly in wholesale trade and took control of 40% of the retail shops, the small players in the business closed their shops. Apart from this, the established players, like Jawahar Jaiswal, who once had a say in the Purvanchal area, also had to close their shops. There was only one way to enter the liquor market in UP. Sm
uggle the liquor from another state. Ponty Chadha had a solution for this. He created his own private intelligence team. Officers were made in every district, who were given SUVs and private bodyguards to investigate whether the liquor being sold was Ponty Chadha's or not. These people didn't report to the government's excise department. Instead, they were doing parallel work. The work that the government should be doing. But because of their collusion with Mayawati, he didn't just benefit from
the liquor business. The bureaucrat who helped him with their liquor business, also provided him with sugar mills. The CAG accused the Mayawati government of selling 4 sugar mills worth ₹2,000 crores to Ponty Chadha for ₹200 crores. You can guess what the bureaucrat and the government got in return for these contracts. Ponty Chadha wanted these sugar mills because sugar creates a by-product called molasses. To make whisky in India, these molasses are mixed with alcohol. So Ponty Chadha was not o
nly involved in wholesale and retail, but also in the manufacturing business to control the entire supply chain. I'm telling you all this because we'll soon discuss the liquor policy of Delhi and Uttar Pradesh, where these things will be relevant. Because of these sugar mill deals, an investigation against the Mayawati government was also conducted in 2011. Now, a good businessman won't depend on just one party. When the party changed, Ponty Chadha also became friends with Amar Singh, who introd
uced him to Akhilesh Yadav. That's why you'll see Ponty Chadha in Akhilesh Yadav's swearing-in ceremony. During Akhilesh Yadav's government, Ponty Chadha's company, Wave Group, was given a contract worth ₹9,000 crores for a mid-day meal. That's why Pratish Nandi once said that Ponty Chadha gives milk to children and alcohol to their families. In 2012, a tax raid was also carried out against Ponty Chadha. But after this raid, senior tax official S.S. Rana was removed from his position. To change
his image, he tried to enter many businesses and he wanted to become a new Vijay Mallya. That's why he financed Bollywood movies and bought hockey teams. Now, the problem between Mayawati and Akhilesh Yadav's government is that the alcohol licenses were sold through an open auction model. I'll tell you in a while what an open auction model is. But the man who used to predict the elections in UP, he couldn't predict his own death. "These visuals are of Ponty Chadda and his brother Hardeep's last
rites." Ponty Chadda was having a dispute with his younger brother over the land of his family's farmhouse. There was a shootout between the two brothers and both of them were killed. Even after his death, the Samajwadi Party government didn't change the alcohol policy. Instead, they were debating who would be the new Ponty Chadda. Jawahar Jaiswal or other businesses. This liquor policy changed after 2017 when Yogi Adityanath came to power. "Yogi Adityanath is going to take an oath as the Chief
Minister of Uttar Pradesh." In 2018, IAS Kalpana Awasthi removed the old liquor policy and created a new one. 36 new wholesalers were given licenses which broke the monopoly of Ponty Chadda. The new policy of the Yogi government removed the open auction system and introduced an e-lottery system. I'll go into more detail about this but many people were impressed with this policy. In fact, the ex-principal secretary of Uttar Pradesh, Sanjayji, said that states like Kerala, Haryana, Maharashtra, an
d Karnataka have also tried to adopt the policy of Uttar Pradesh. Now let's understand the difference between open auction and e-lottery system by comparing the old policy of Delhi with the new policy of Uttar Pradesh. A government can make money from alcohol in three ways. The first way is by selling the licenses of wholesalers and retailers. The second way is by collecting excise duties from the alcohol manufacturers. So whenever a bottle leaves a factory, the manufacturer has to pay an excise
duty to the government. The third way is VAT, i.e. value-added tax, which the end consumer has to pay. So if you look at your bill, there's a VAT in it. Alcohol doesn't require a GST. Instead, the central government has ensured that states can decide their own policies. In Goa, VAT is the lowest, so alcohol is the cheapest there. And in Karnataka, it's the highest. Now, Delhi's policy was based on an open auction system. Its objective was that the Delhi government can make a lot of money from l
icenses. But in the policy of Uttar Pradesh, the license costs are very low. In fact, their priority is how to make money from VAT and excise duties. And this is the main difference between the two policies. The open auction system is like the IPL bidding system. Many private players come to the market and say that they want to sell alcohol. The government has some licenses. Licenses are auctioned. The highest bidder gets the license. And the government gets the license fees. Prior to this polic
y, half of the retail shops in Delhi were run by the government. But in this policy, the Delhi government said that they won't run any retail shop. So they're giving licenses for 849 retail shops. Delhi was divided into 32 zones. And retail licenses for each zone were sold. In each zone, there could be at least 27 retail shops. The government said that by selling these licenses, they're maximizing their government revenue. Earlier, they'd earn only Rs 7,000 crores. Now, they'll earn Rs 9,000 cro
res. Earlier, they were selling alcohol. But now, the Delhi government said that they'll sell licenses, not alcohol. The Delhi government said that this will increase the government's revenue and customer experience. Now, these shops won't be run by the government, but by private players. But there's a downside. As these licenses were being sold in an open auction system, it meant that only big businesses could buy these licenses. For example, if someone wanted to buy a wholesale liquor license,
they had to prove to the government that their turnover was more than Rs 1.5 billion in the last 3 years. So, small players couldn't enter this business. How could their turnover be Rs 1.5 billion in the last 3 years? That's why AAP was accused of favouritism and corruption. "It's alleged that there was a foul play in giving license to the private players." Now, this wasn't the only controversy in Delhi's liquor policy. Another accusation was that according to the policy, manufacturers, wholesa
lers, and retailers can't be the same person. Because if the same player does more than one thing, he'll be able to control the price. Now, this was written in the policy, but in reality many players were doing more than one thing. But I won't go into details. Delhi's open auction system is the only focus of this video. The advantage of this system is that the government gets good license fees. But the disadvantage is that only big businesses win licenses in this system. Apart from this, it was
easy to create a monopoly in Delhi's policy. There were 32 zones in Delhi, but according to the policy, any player could bid for more than one zone. Now, after the controversy, when the leaders were arrested, Delhi changed its policy again and went back to its old policy. Now, all the retail shops in Delhi are run by government companies. That's why it's hard to find liquor from many brands in Delhi. In 2020, there were more than 800 liquor shops in Delhi. Today, there are only 566. While Uttar
Pradesh's e-lottery system is different. The government doesn't want to earn money through license fees, but through excise duties. The more bottles are sold in Uttar Pradesh, the more profit the government will get. The e-lottery system is like any lottery system. You have to go online, fill in your information, and then the Uttar Pradesh government will have a lottery to decide who gets the license. There's no room for favouritism because the computer software decides who gets the license. The
re's no auction in this system. Another feature of this system is that a person can't have more than two retail shops in their name. This prevents a big business from creating a monopoly in the state. In Delhi, you have to show business turnover documents to win a license. In Uttar Pradesh, there was no such condition. For a wholesale liquor license, you just had to show a solvency certificate which showed that your financial condition was stable. Because of this policy, many small liquor stores
are opening in Uttar Pradesh. The more bottles are sold in Uttar Pradesh, the more profit the government will get. The same process was used by Chief Minister Rajnath Singh in 1999. The system was not online. But it changed when Mayawati became the government. Many alcohol companies have praised UP's new policy. Like Radico Khaitan. It makes 8PM Whiskey and Magic Moments Vodka. Their market share in Uttar Pradesh has increased by 8% to 30%. Radico Khaitan's COO Amit Sinha said that UP has the m
ost liberal alcohol policy in the country. Anyone can sell alcohol there. But the Uttar Pradesh government not only benefited from its policy, but also from Bihar's policy. "Bihar's CM has announced a ban on alcohol." Bihar's new law initiated the smuggling of alcohol which benefited Uttar Pradesh. In 2023, people were celebrating in a border area of Uttar Pradesh. Many Kanvariyas were present. And there were Jai Shri Ram slogans in every house and car. But there were many people who were taking
advantage of this. A villager said that in the month of Sawan, alcohol is smuggled. These smugglers disguise themselves as Kanvariyas to deceive the police. Many Bihari youth cross the border and come to Uttar Pradesh. They take cartons of alcohol from many suppliers and deliver them to Bihar. The surrounding states are benefitting from the revenue Bihar lost. States like Jharkhand, West Bengal, and Uttar Pradesh. The Uttar Pradesh government is not satisfied yet. They want to increase their re
venue even more. That's why they're introducing new policies. One of the policies is to remove molasses liquor and promote grain liquor. Why? Money. Let me give you a small lecture on whisky. India is a whisky-drinking country. Where whisky is made from grains like maize, wheat, barley, or rye, in India, whisky is mostly made from molasses. In many countries, if you don't use grains to make whisky, it's not called whisky. In India, molasses is used which is a by-product of sugar refining. This m
olasses is fermented and boiled to make a concentrated alcohol which is then mixed with scotch or other whisky. And then we get Indian-made whisky. So if whisky is made from grains all over the world, why are we using molasses? Because of the British. When the British were in our country, they had several sugar mills. These sugar mills contained a large quantity of molasses. So it was easy for them to make whisky from this molasses. After independence, our country was very poor and there was a s
hortage of food. So when people in our country are dying of starvation, who will use grains to make alcohol? But the situation is changing. In states like Punjab, Haryana, and Maharashtra, liquor policies have been made so that instead of molasses, suppliers use grains to make whisky. These states then export their grain liquor to Uttar Pradesh. But the Uttar Pradesh government believes that grain-based whisky is being made all over the world. This is also happening in India. So why should Uttar
Pradesh import liquor from another state? We should also make grain-based whisky. That's why they're promoting this so that Uttar Pradesh doesn't have to import liquor from other states. And the consumers get what they want. The revenue Uttar Pradesh government is getting from liquor is crucial because it's now dependent on the central government for its revenue. In the video on Punjab, I told you that any government can earn money in 4 ways. From its tax revenue, such as liquor, petrol, or die
sel taxes. From its non-tax revenue, such as alcohol licenses or lottery sales. From the central government's share taxes, such as GST or income tax. Finally, the aid from the central government. The UP government is dependent on the central government for its revenue. But this is changing in Uttar Pradesh. The major reason is alcohol. The revenue is important for the government because it hasn't been able to make much money in history. Between 1965 and 1985, Uttar Pradesh's tax revenue had fall
en to a great extent. Because like other parts of the country, Uttar Pradesh was mostly dependent on agriculture. But at this time, income tax on agriculture was abolished and land reforms were implemented which reduced land revenue. Similar stories were heard in other states too. But many states, especially West Bengal and Assam's tax revenue didn't decrease because commercial crops were being grown there. For example, tea. The state government was earning tax on the income of these commercial
crops. But commercial crops weren't being grown in Uttar Pradesh which made it difficult to collect tax. During the 1990s, there were many caste movements in Uttar Pradesh which is known as Mandal Politics. Many political parties were afraid to impose tax on any vote bank. Because of this, Uttar Pradesh's tax revenue was decreasing. After the liberalization reforms of 1991, where Maharashtra, Gujarat, Tamil Nadu and Karnataka benefited, due to industry and service sectors, Uttar Pradesh lagged b
ehind. As a result, Uttar Pradesh's tax revenue never reached its peak. The situation changed after 2004. Between 2005 and 2015, Uttar Pradesh's tax revenue increased by 4 times. Sectors like construction grew in Uttar Pradesh. Uttar Pradesh also benefited from the development in the country. But it was still dependent on the central government. The importance of alcohol increased when GST was introduced. After the introduction of GST, sales tax could not be changed by a single state government.
So Uttar Pradesh, where there's neither industry nor service sector, had only a few ways to increase its revenue. Either increase the price of petrol or diesel. But this isn't easy because it has a big political impact. So no state government wants to do this. This is why increasing excise revenue is important for Uttar Pradesh. 85% of excise revenue comes from the sale of alcohol. This is why Yogi Adityanath focused on this policy. He is thinking of increasing tourism and industry. But these t
hings happen in 5-10 years. The impact of changing liquor policy can be seen in 2-3 years. But there's a dilemma. Is it right or not? This is a debate between the moral and practical people. It's true that in the last 10 years, India's per capita alcohol consumption has increased by 2 times. A lot of research has shown how alcohol consumption harms women and children. Domestic violence and alcohol consumption have a direct relationship. Some people say that Gujarat has fewer crimes due to the al
cohol ban. But if we look at Bihar's evidence, it's not true. Illegal alcohol is a problem because smuggling is still going on. Research has shown that crime has increased due to alcohol ban. This debate is complicated. But Uttar Pradesh's liquor policy is very clear. They've decided that if Uttar Pradesh wants to stand on its feet, they'll have to earn tax revenue from alcohol sales. Recently, for New Year's and Christmas, Uttar Pradesh's liquor sales timings were increased by an hour. "The alc
ohol shops can remain open for an extra one hour." "The government has announced that for the new year, the alcohol shops will remain open from 10 AM to 11 PM." But for Yogi Adityanath, there's a complication. How can he be moral and earn money from alcohol? For example, Sourav Goyal has opened many liquor stores in Uttar Pradesh. He wants to expand in Lucknow but he's not getting approval. An official of the UP government said that since elections are coming up, the top leadership doesn't want
liquor stores to become a political issue. Noida and Ghaziabad are near Delhi so stores can be opened there. But if a store like this opens in Lucknow, it can create a political uproar. So this is the game of politics where the monk and the old monk are both available for the people of Uttar Pradesh. If you liked the video, subscribe to get more informative videos like this. If you want to watch a financial deep-dive for Punjab, or if you want to know why the Punjab government has gone bankrupt,
then watch this video.
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