The consumption of tobacco in all its forms — cigarettes, cheroots, bidis, gutka and other forms of chewing tobacco — is our number one health challenge now.
According to the World Health Organisation, there are approximately 120 million smokers in India, and India is the home of 12 per cent of the world’s smokers. More than 10 million die each year due to tobacco in India. According to the same study, 70 per cent of adult males in India smoke. Among adult females, the figure is much lower, at between 13-15 per cent. The total tax revenue derived from cigarettes and tobacco products is about Rs 30,000 crores.
According to a study commissioned by the Government of India, the total economic costs attributable to all diseases related to tobacco consumption is over Rs 104,000 crores.
In recent years, the cigarette business has been reporting a drop in consumption. But we do not know if there was a corresponding decrease in the incidence of cancer and other smoking induced ailments. The government, presumably under pressure from the rich and powerful cigarette industry, has not yet conducted a detailed study of this and the consequential cost to the economy in spite of a specific request from the revenue department to enable it to evolve a scientific basis for cigarette taxation.
Whatever be the drop in stick sales, it is very evident that rupee sales and profits have not shown any decline. Industry bosses can, like the cigarette-smoking Dev Anand in the film Hum Dono did, continue to sing “barbadhion ka jashn manata chala gaya, har fikr ko dhuey mey udhatha chala gaya!”
Objectively speaking, this is not a bad situation at all, and is proof that the government policy, whether deliberate or accidental, is still halfway good. For, as far as this industry goes, a good policy will ensure that the state gets more revenue, while the consumption keeps dropping each year. But this does not necessarily mean any good news on the health front, as dropouts may have switched to bidis? Nevertheless, the decline in consumption, attributed by the industry to higher excise duties in each of the previous few budgets, means the policy is in the right direction and that there is a case for further increasing the tariffs on cigarettes and bidis once again this year.
The cigarette industry will, no doubt, argue now that it is not wise to kill the goose that lays the golden egg. In this case it is not a golden egg but a time bomb, as each cigarette smoked now implies a future medical cost. Very recently the US government negotiated a $368 billion damages package from the US cigarette industry to pay for future health costs. As the finance minister’s adviser, I had once recommended that the health ministry be asked to similarly estimate future health costs in India. It followed that excise duties should be determined with the idea of recovering these costs now. I also advised that raising excise duties each year is a win-win situation. If consumption drops, it means future savings.
It is not that the incidence of smoking is low in India if we take into consideration the widespread bidi habit. NCAER has estimated that 348 million people belong to households with an annual income of over Rs 12,500. Logic suggests that the vast majority of cigarette and bidi smokers must come from this segment. This is, by any standards, a very high and dangerous figure. Another point of concern is that the US congressional investigations have revealed that cigarette companies routinely spiked tobacco with extra nicotine to intensify addiction. It isrumoured that similar practices are still widespread in India. There is, therefore, a case for pegging excise duties with nicotine content as well.
One reason suggested for the drop in stick sales in the first half is that smuggled cigarettes ate into the share of locally produced brands. Industry analysts estimate that a third of MNC production are for illegal exports. The port of Antwerp is the hub of the international cigarette smuggling business. Antwerp is to cigarettes what Dubai is to gold! The Indian cigarette industry estimates that smuggled international brand penetration now accounts for two per cent of the market and to some 30-40 per cent of the segment for king-size cigarettes.
Cigarettes are an easy target because they are in the organised sector. But the consumption of bidis and chewing tobacco is just as dangerous and these sectors are growing. Therefore, the danger to public health only keeps increasing. The unfortunate part of this is that the government actively supports and subsidises the increased production of tobacco. Tobacco farming makes a huge footprint on our agriculture and now accounts for 4,95,000 hectares of the most fertile land. Apart from using up valuable agricultural land, tobacco farmers derive all the largesses the state and Central governments confer on them. Free water and free power are the more obvious ones. Then there is subisidised fertiliser and tax-free status for all farming. The government must review these policies. I would like to see tobacco farming taxed on an acreage basis to make it less profitable and for the government to recover all the unmerited subsidies that tobacco farmers encash.
This is easier said than done. The tobacco sector is a powerful vested interest. ITC and the other cigarette manufacturers are the top half of that pyramid. It is easy to take it on, but it’s now time to take on the base.
Today, May 31, is World No Tobacco Day...