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The Nexus between Govt and Tobacco giants

This dangerous relationship prevents the governments from pushing more tobacco cessation products and their effort stops at 30-sec ads before movies

Health departments under both state and central governments try and come up with initiatives to help people overcome tobacco.

But are health advisories enough to get the job done? I hardly think so.

Tobacco cessation products including patches and gums don’t receive enough push into mainstream retail.

Let me help you scratch the surface here on some of those facts

>The avg annual collection including GST and excise duty from tobacco products alone was Rs. 53,750 Cr. While the amount is large it has a lesser-known value from a perspective of societal impact. WHO recommends tax incidences on tobacco to be at least 75% to deter usage but India has it at ~55%. The increase in tax incidences each year specifically in APAC has resulted in both reduction in cigarette consumption and also increase in tax revenues so it is surprising that there is little to no change over the last couple of years

>ITC Limited although has multiple businesses, cigarettes contribute the most to their revenue. In Q1 of FY23 alone the segment EBIT is up by 30.1% YoY and in the agribusiness which includes leaf tobacco, the segment revenue is up by 82.7% YoY. With this growth in both revenues and profits, the firm’s contribution to the tax revenues is also significant. They in fact credit stability on taxes as a contributor to their growth. What a shame!

>There is an increase in the number of individuals opting for cancer protection policies and with tobacco products known to be the largest external contributor of cancer-causing carcinogens it becomes important for users to buy this cover. LIC With an average sum insured of Rs. 50 lakhs LIC collected a premium of Rs. 29.16 Cr in 2018 in just under 9 months of launch only in the Western region.

>While there are multiple companies selling cancer care plans I want to focus on LIC. Apart from this plan LIC sells, you also have assumed a higher risk as a tobacco user thereby almost doubling your premiums. This is true in both the case of Health and Term plans. Now comes the blatant government hypocrisy.

>The government till they recently sold 3.5% of their stake through the highly anticipated IPO of LIC for a whopping Rs. 21,009 Cr held 100% of the company. The company that promises financial security to policyholders and their families in events of uncertainty backed by the government of the country holds 15.7% worth over Rs. 9 lakh Cr in ITC Limited. Other insurance companies together hold an astonishing 11.12% stake in ITC Limited

How can the government of the largest democracy in the world ever justify holding such a large stake in a Tobacco company when in the same breath they speak about tackling public and health issues arising from tobacco consumption?

Love to hear your thoughts in the comments


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