Feb 05, 2025 10:47 PM IST
Raising tobacco taxes will not only improve public health but also boost government revenue, providing fiscal space for healthcare investment
The COVID-19 pandemic has highlighted that health promotion and disease prevention are fundamental to economic growth and stability. With noncommunicable diseases (NCDs) causing 74% of all deaths globally, India must prioritize actions to protect the health of its citizens and prevent premature disease and death.
Tobacco is the world’s leading cause of avoidable death, claiming over one million lives annually in India and significantly draining the economy. The economic burden of tobacco use in India is estimated to exceed ₹1.04 lakh crore (approximately $15 billion) annually, including healthcare expenses and productivity losses due to tobacco-related diseases and premature deaths. This figure represents about 1% of India’s GDP (around $3 trillion in 2023), reflecting a significant economic impact. Tobacco’s financial burden pushes about 18.4 million people into poverty every year, with households diverting essential funds from food and education. The Household ConsumptionExpenditure Survey: 2022-23 reveals that rural households spend more on tobacco than on education, a tragic misallocation that thwarts poverty alleviation and development efforts.
The economic rationale for strong tobacco control is compelling. Tobacco taxes are the most effective way to reduce consumption and should be a priority in the national budget. Recent policies have neglected tobacco taxation to focus on pandemic recovery, resulting in unchanged tax rates since GST’s introduction in 2017. This stagnation has made tobacco products, especially bidis and chewing tobacco, more affordable over the past decade, which has the potential to undermine past tobacco control success.
Cigarette production and use reached its highest level in a decade by 2023, derailing public health gains. Data from the Ministry of Health and Family Welfare’s Global Adult Tobacco Survey (2016/17), shows India has 267 million tobacco users, making it the second-largest user of tobacco products in the world, behind China. According to the Global Youth Tobacco Survey India 2019, 8.5% of children aged 13-15 were current tobacco users. This survey also found that the median age when a child first uses a cigarette, bidi and smokeless tobacco is 11.5 years, 10.5 years and 9.9 years, respectively. The continuing high rates of tobacco consumption among all age groups underlines the urgent need for effective public health interventions to address this epidemic.
India has demonstrated unwavering commitment to discourage tobacco use, which is exemplified by the implementation of large pack warnings (85% of both sides of the panel), ban on electronic cigarettes, regulation of depiction of tobacco use on over-the-top streaming platforms, creation of impactful anti-tobacco health messages for playing in cinema halls, health education on the harms of tobacco in schools, colleges and universities through the implementation of Guidelines for Tobacco Free Educational Institution, among others.
However, this progress in tobacco control is at risk of being reversed if tobacco products remain affordable. The government must continue aligning with the WHO Framework on Tobacco Control (FCTC) by executing effective demand-reduction strategies, such as annual tax increases on all tobacco products, through GST and /or Central Excise, without any exemptions.
There will be significant public health gains if India reforms the complex tiered taxation system for cigarettes to meet WHO-recommended standards, where tax makes up at least 75% of the retail price. The GST threshold limit of ₹4 million exemption for industries producing ‘sin products’ such as bidis, chewing tobacco etc needs to be revisited. The tobacco industry’s argument regarding illicit trade as a counter to tax increases is unsubstantiated and outdated. Existing tools – such as digital monitoring systems and implementation of tracking and tracing systems – should be used to stop illicit trade, not lowering taxes.
Raising tobacco taxes will not only improve public health but also boost government revenue, providing fiscal space for healthcare investment. A healthier population is more productive workforce that can further enhance India’s economic strength. India’s fiscal policies must prioritize health through stringent tobacco control measures. Strengthening tobacco taxation is critical for sustainable development, equitable growth and a healthier future for all. The time to act is now!
Dr Roderico H. Ofrin is the WHO Representative to India
Recommended Topics
