The price of cigarettes in India will soon shoot up once again, after the budget raised the excise duty on the consumer good by between 11% and 72%, depending on the length of the stick. But this will do little to discourage the vast majority of Indian smokers, who prefer the beedi, or tobacco rolled in the tendu leaf.
India has three times as many beedi smokers as cigarette smokers. In urban India, 11% of households reported beedi consumption, compared with 8.4% for cigarettes. In rural India, 27% of households reported beedi consumption, compared with 4.8% for cigarettes. Higher beedi consumption is a direct result of its significantly lower price. Though the cost of production and various sundries are much higher for big cigarette manufacturers, the low rate of taxation also contributes towards keeping prices low.
“These are healthy measures, and I hope everyone would welcome them from the point of view of human and fiscal health,” finance minister Arun Jaitley said while presenting the budget in Parliament on Thursday, with regard to the spike on cigarette duty.
The budget has also increased the duty on pan masala, from 12% to 16%, and on gutka and chewing tobacco from 60% to 70%. It proposes increases in duties on cigars, cheroots and cigarillos. Tobacco consumption kills one million Indians every year and 5.5 people worldwide.
Many experts criticise various features of India’s taxation policy on tobacco products, but find the different taxes on beedis and cigarettes to be particularly problematic when it comes to efforts to lower consumption.
The low tax on beedis is the result of a number of factors. Governments might well be wary of hitting low-income supporters where it hurts; only households in the country’s top 5% income-bracket have higher cigarette consumption than beedis.
There may also be a desire to protect business interests in the beedi sector, with a number of high-profile politicians linked directly and indirectly to beedi production.
Finally, many low-income workers work in the beedi industry, so there may also be genuine concern about protecting their livelihood. “Socioeconomic considerations with respect to beedi-rolling as supporting the livelihoods of poor unorganised workers has been a consideration,” says Dr T. Sundararaman of the People's Health Movement in India, “But that is a weak and even wrong argument [by the government]. One must move for alternative employment.”
As announcement of the hike came, Twitter, as always, was ready to have some fun.
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India has three times as many beedi smokers as cigarette smokers. In urban India, 11% of households reported beedi consumption, compared with 8.4% for cigarettes. In rural India, 27% of households reported beedi consumption, compared with 4.8% for cigarettes. Higher beedi consumption is a direct result of its significantly lower price. Though the cost of production and various sundries are much higher for big cigarette manufacturers, the low rate of taxation also contributes towards keeping prices low.
“These are healthy measures, and I hope everyone would welcome them from the point of view of human and fiscal health,” finance minister Arun Jaitley said while presenting the budget in Parliament on Thursday, with regard to the spike on cigarette duty.
The budget has also increased the duty on pan masala, from 12% to 16%, and on gutka and chewing tobacco from 60% to 70%. It proposes increases in duties on cigars, cheroots and cigarillos. Tobacco consumption kills one million Indians every year and 5.5 people worldwide.
Many experts criticise various features of India’s taxation policy on tobacco products, but find the different taxes on beedis and cigarettes to be particularly problematic when it comes to efforts to lower consumption.
The low tax on beedis is the result of a number of factors. Governments might well be wary of hitting low-income supporters where it hurts; only households in the country’s top 5% income-bracket have higher cigarette consumption than beedis.
There may also be a desire to protect business interests in the beedi sector, with a number of high-profile politicians linked directly and indirectly to beedi production.
Finally, many low-income workers work in the beedi industry, so there may also be genuine concern about protecting their livelihood. “Socioeconomic considerations with respect to beedi-rolling as supporting the livelihoods of poor unorganised workers has been a consideration,” says Dr T. Sundararaman of the People's Health Movement in India, “But that is a weak and even wrong argument [by the government]. One must move for alternative employment.”
As announcement of the hike came, Twitter, as always, was ready to have some fun.