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Why India Ignores A $16-Billion Smoking-Led Health Crisis

Charu Bahri

In January this year, the government asked for public opinion on tougher new laws to curb smoking: To raise
the minimum smoking age to 21 from 18, and to ban the sale of single cigarettes, which account for 70% of
nationwide cigarette sales.

People responded enthusiastically; 45,000 emails and 100,000 letters poured in to the health ministry, as
Reuters reported earlier this month. What they said, however, is not known because the government hasnt
yet read the messages, according to a health ministry representative quoted in the story.

Like those messages, the World Health Organisations Report on the Global Tobacco Epidemic 2015 is
largely ignored in India. Its single-line message: Raising tobacco taxes can help curb smoking.

Curbing smoking is very important to India for two reasons:

About one million Indians die from smoking-related causes every year, which are among the top three
ways to die.

Smoking also saps Indians of money; more money, it emerges, than it earns for the government.

Indians aged 35 to 69 spent Rs 104,500 crore ($15.9 billion) in 2011 on diseases associated with tobacco
including cancer, respiratory diseases, tuberculosis and cardiovascular diseases. This figure is almost six
times as much as central-excise tax collections from all tobacco products that year, according to the
Government of India, WHO and the Public Health Foundation of India.

To put the health cost of tobacco in further perspective, it exceeded the combined annual state and central
government expenditure on health care by 12% in 2011.

Taxes on cigarettes risenot enoughbut they do. Bidis are the problem

A 10% price increase on tobacco products could cut consumption between 2% and 8% in developing nations,
according to the WHO. Tax hikes increase prices, which in turn lower demand and protect people from the ill
effects of tobacco.

Raising taxes is a win-win situation, said Arun Thapa, Acting WHO Representative to India. Its good for
human health and for the countrys fiscal health.

Over the last 19 years, taxes on cigarettes in India have risen 1606%. As the next part of this series will tell
you, that isnt quite enough, and the six-tier tax structure is so complexbased on stick lengths and
filtersthat companies manipulate it with relative ease to keep demand intact.

The biggest problem in curbing tobacco use lies with the influence wielded by those who make the
humblerbut more damagingcousin of cigarettes, the bidi.

Taxes on a pack of bidis are 7% of the retail price, less than a tenth of the WHOs suggested level of 75%. A
20-stick pack of best-selling cigarettes is taxed around 60% of retail price.

Bidi smokers make up 61% of the nations 120 million smokers, according to the Global Adult Tobacco
Survey (GATS) 2010. This is a conservative estimate. Some studies peg the numbers of bidi smokers higher,
at 73%, even 85%.

Bidi smokers face a higher risk of developing potentially-fatal chronic obstructive pulmonary disease

(COPD), among other illnesses, because tobacco is packed more loosely in bidis, requiring smokers to inhale
more strongly.

But the bidi industry has consistently squeezed concessions from the government.

Million of jobs and livelihoods at stake, so taxes must stay low, argue bidi barons

Here are some concessions the government gives the bidi industry:

Handmade bidi units (98% of bidis are handmade ) producing less than two million sticks in a year are
exempt from excise duty.

Bigger bidi makers pay a duty of 1.6 paise per handmade stick and 2.8 paise per machine-made bidi.
The duty on cigarettes varies between Rs 1.28 and Rs 3.37 per stick.

Some eight million people work as bidi rollers nationwide, said a representative of the All India Bidi
Industry Federation.

Source: World Lung Foundation; WHO

Imposing taxes on bidis and introducing pictorial warnings on bidi packs would lower demand, said Sudhir
Sable, secretary, All India Bidi Industry Federation. Any fall in production would jeopardise the jobs of bidi
rollers. It would also adversely impact tobacco farmers, as well as the thousands of corner shops selling the
product.

Increasing taxes on bidi would invariably increase the illicit trade in bidis, leading to the proliferation of fake
bidis, Sable argued. It would also deprive states and the central government of tax revenue.

These arguments do not wash, say experts.

No socio-economic case for low bidi taxes, contend experts

In 2013, the bidi industry contributed less than 3% to the governments central excise collection from
tobacco products, not surprising, given the low excise duty it pays.

A Public Health Foundation of India study says there is indeed scope for taxes on bidis to be increased.

Doubling bidi excise would help cut consumption by 40% and increase tax revenue by 22%, said Monika
Arora, director, Health Promotion and Tobacco Control Initiatives, Public Health Foundation of India.

Essentially, the argument goes, higher tax rates would offset any loss of excise from fall in consumption. In
the bargain, spending on useful goods and services will grow.

Money not spent on bidis or cigarettes will not disappear from the economy, said Prabhat Jha, founding
director of the Centre for Global Health Research, University of Toronto. It will be spent on other products
which generate employment.

Additional revenue could help the government meet the cost of transitioning bidi workers to other means of
employment. The government has previously considered a cess on cigarettes to encourage farmers to switch
from tobacco to other crops.

So, why not tax all segments of the tobacco-products industry, experts suggest, to fund a gradual transition?
Bidi workers, among some of Indias most disadvantaged people, can only benefit.

Bidi workers: Among Indias worst paid workers and plagued by ill health

The effect (of high taxes and low consumption) on bidi employment will take years, said the University of
Torontos Jha. It does not mean current bidi rollers will lose their jobs. It means fewer people will take low
paying bidi rolling jobs in the future.

West Bengal, Maharashtra, Andhra Pradesh and Karnataka are among Indias top bidi-producing states. In
West Bengals district Murshidabad, bidi rolling is pretty much the only livelihood.

Bidi workers in Murshidabad earn Rs. 100/- per 1,000 bidis. Those in Uttar Pradesh earn Rs. 90/- per 1,000
bidis. Bidi workers are among the lowest-paid manufacturing employees in India, according to this 2014
study. They constitute 1% of all employment in India but collectively earn 0.1% of all wages.

They earn minimum wages or negotiated wages, said Sable. Negotiated means a lower wage than the
minimum government-prescribed wage, for which Sable said the consent of the local government authority is
always taken.

Lower wages are negotiated because the cost of the bidi has to be kept low for the consumer and also ensure
parity with wages in neighbouring states, said Sable.

Collusion between local government authorities and the bidi industryas Sable admits tokeeps bidi workers

in penury, while tying their daily wage to punishing targets of about 1,000 bidis a day causes ill health, write
Sunanda Sen and Byasdeb Dasgupta in their book Unfreedom and Waged Work: Labour in Indias
Manufacturing Industry.

Most workers are given tobacco to roll at home. Protective measures such as masks and gloves are unheard
of, and soon enough, they suffer the ill effects of exposure to tobacco flakes and dust.

Ear, throat and lower respiratory tract infections are common among bidi workers, said Arora. So are
cancer and tuberculosis.

Bidi workers and rollers exposed to tobacco dust had a six-fold higher incidence of respiratory impairments,
such as breathlessness and cough, reported a 2006 study in Murshidabad, West Bengal.

Many women workers suffer gynaecological problems and pregnancy complications. This should be a
concern, as 90% of the workforce is female.

Transitioning bidi workers to other manufacturing jobs would be good for them. Raising taxes on bidis
would be good for the country as a whole. The only people who might not benefit are the bidi company
barons.

This is the first of a two-part series. Tomorrow: How Indias Tax System Helps Cigarette Smoking
Flourish.

(Bahri is a freelance writer and editor based in Mount Abu, Rajasthan)

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