Tobacco costs vs health-spend PDF Print E-mail
Monday, 18 September 2017 03:59
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Costs of tobacco outweigh government’s total spend the health sector! Is there a plan to deal with this?

Powerful tobacco lobbies have ensured, over the past few months, the government has taken action against two bodies—FCRA clearances were revoked for the Public Health Foundation of India (PHFI) and a Michael Bloomberg charity—that have worked on effective anti-tobacco campaigns. While the two organisations deal with the FCRA bans that cripple their ability to get overseas grants to carry out their work, the government needs to answer some tough questions. Signing anti-tobacco pledges, like so many senior ministers have, is all very well, but the problem is the lack of action to curb the ill-effects of tobacco. A public interest litigation (PIL) that has been filed in the Bombay High Court, however, will force the government to give some answers since it cuts to the heart of the problem: With such huge tobacco costs, why are public sector insurance companies and the government invested in tobacco companies?The PIL focuses on companies like ITC in which the insurance companies and the government—through SUUTI—have a Rs 100,000 crore-plus shareholding, but the damage done by lesser known companies who make bidis and chewing tobacco is far greater since 4-5 times more people consume the latter two.

The costs cited in the PIL are a bit dated, but nonetheless staggering. In 2011, estimates were the costs of tobacco-related health issues, including the death of more than 10 lakh people a year—that’s one person every 30 seconds—added up to over Rs 1,00,000 crore, or 1.2% of GDP in that year. To put this in perspective, between the Centre and the state governments, India spends around 0.9% of GDP on all manner of health issues, not just those related to tobacco. So, it’s clearly a losing battle. To the extent, the government is trying to fix the problem by taxing users, it applies to only cigarettes which account for a small fraction of tobacco use. While cigarettes pay an excise duty of around 50%, bidis get taxed at around 2-3% and chewing tobacco pays around 5-6%—VAT rates differ from state to state, but are roughly 26% for cigarettes and 8-10% for bidis and chewing tobacco. As a result, while the share of cigarettes in total consumption of tobacco has halved from around 20% in the early 1980s, there has been little drop in overall consumption. And for all the talk of trying to discourage tobacco, the acreage under it has risen from 3.5 lakh hectares across the country in 2001-02 to around 5 lakh hectares today and, production is up from 5.5 lakh tonnes to 8.4 lakh tonnes—whenever any tough action is sought, the millions of farmers are brought up as a convenient shield.

The PIL raises more worrying issues as it talks of tobacco causing huge deforestation—4-5 kg of firewood is required for curing 1kg of tobacco – and of soil getting depleted of all nutrients after tobacco cultivation. The Rajya Sabha standing committee on environment reports that the it was told by the Central Pollution Control Board that 200,000 hectares of land in Andhra Pradesh “which were once forests or cultivable fallows and pastures, are now no more than a horrifying barren waste, where nothing may grow”. The committee says the environment ministry quoted a study as saying 1.2 lakh tonnes of firewood are need for curing tobacco in Karnataka alone each year. Amazingly, though this aspect has been known for decades—for the record, the tobacco industry’s stand is there is no deforestation since commercial plantations provide the firewood—the environment ministry told the committee “they had conducted Environmental Impact Assessment on 39 industries but tobacco curing was not among them”. The committee has now asked, decades after the ill-effects of tobacco have been known, the ministry to conduct such an EIA.

Right now, the PIL is in the Bombay High Court, but it will almost certainly make its way to the Supreme Court. At that point, if the government hasn’t taken the requisite action, it may cut a sorry figure. Right now, the issue is about how PSU companies that are in the business of insuring lives are invested in products that take them away but it could well spiral into a larger one on what the government is doing to protect people’s lives from tobacco—that’s what happened in the case of diesel last year.


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