The governments ~ both at the Centre and states ~ have done their best to protect the poor man’s tobacco ~ the humble beedi. The West Bengal government has raised the levies on alcohol and tobacco-related products such as cigar, cheroot, cigarettes, chewing tobacco and pan masala. These products have been included in Schedule D that comprises the highest impost bracket where tax rates levied are in excess of 13.5 per cent. Yet, beedi has been excluded from that list.
Bengal’s finance minister Mr Amit Mitra said Miss Mamata Banerjee’s government was aiming at a 30 per cent revenue increase ~ amounting to Rs 6,000 crore ~ this fiscal mainly through improved administration of taxation procedures. Every time beedi escapes the axe, the anti-tobacco lobby protests vociferously, brandishing slogans and statistics. But such voices are either ignored or forgotten. No matter what, the ruling government’s sympathy for the beedi merits a harder look.
According to an Indian Council for Medical Research study conducted during 2001-02, more than Rs 30,000 crore are spent on treating major tobacco-related diseases in India ~ an amount four times the revenue generated by the tobacco industry. In terms of tobacco consumed, beedis command 48 per cent of the market share, smokeless tobacco 38 per cent and cigarettes 14 per cent. As such, beedis account for 77 per cent of the market for smoked tobacco. While there are no definitive figures on the number of beedis produced or consumed annually in the country owing to manufacturing and distribution fragmentation, estimates range between 750 billion and 1.2 trillion. During the 2005-06 fiscal, 106 billion cigarettes were consumed in India. Thus, roughly 10 beedis are consumed in India for each cigarette.
Epidemiologic studies suggest that the all-cause mortality (the mortality rate from a specified cause for a population, expressed per 100,000 population) of beedi smokers is at least as high as that of cigarette smokers. According to a recent report compiled by leading Indian, American and Canadian economists as part of the Bloomberg Initiative to Reduce Tobacco Use, more than 120 million Indians smoke, and 10 per cent of the world’s tobacco smokers live in India. India has the second largest group of smokers in the world after China. Almost a third of Indians ~ 57 per cent of all men and 11 per cent of all women ~ consume some form of tobacco or the other and many use more than one type of tobacco product. Beedis account for nearly 85 per cent of total smoked tobacco in India.
Each year, smoking kills more than 1 million Indians. Without any intervention, more than 38 million beedi smokers and 13 million cigarette smokers alive today will die prematurely from diseases caused by tobacco use. Beedi and cigarette smokers die six to 10 years earlier than those who don’t smoke. A study by Mr Emil M Sunley, former assistant director of fiscal affairs department, International Monetary Fund, estimates that beedis account for 77 per cent of tobacco consumption in India but only 5 per cent of excise tax revenue. Though the study was conducted in 2007-08, the situation has hardly changed. Mr Sunley says that the tax per 1,000 sticks is Rs 14 for hand-made beedis and Rs 26 for machine-made ones. For cigarettes, the tax per 1,000 sticks varies from Rs 168 for micro non-filter cigarettes to Rs 819 for the standard 70 mm filter cigarette and a whopping Rs 2,163 for filter cigarettes longer than 85 mm.
If India increases its tax rate on beedis from Rs 14 to Rs 98 per 1,000 sticks (from 9 per cent to 40 per cent of the retail price) and on cigarettes from Rs 659 to Rs 3,691 per 1,000 sticks (from 38 per cent to 78 per cent of the retail price), 18.9 million Indians can be saved. The increase in tobacco tax will provide the government with an additional Rs 183.2 billion (US$ 3.9 billion) in tax revenue. The price increase will avert up to 15.5 million premature deaths caused by beedi smoking.
Experts say that raising beedi taxes every six months to gradually reach the minimum cigarette tax level of Rs 168 per 1,000 sticks would translate into a gain of an additional Rs 15,000 crore in revenue. Over the next few years, if the tax on cigarettes and beedis are raised to level with that levied on standard 70mm filter cigarettes ~ which was Rs 819 per 1,000 in 2007-08 ~ revenue would increase by around Rs 80,000 crore.
This certainly indicates that the Union and the state finance ministers need to do some number crunching. However, even if they do so, the results would have to be manipulated to protect the interest of their vote bank. It is unlikely that the ministers do not know this. But beedi will remain untouched, at least in Murshidabad, West Bengal, where a six lakh-strong votebank comprising members of the beedi manufacturing industry has been a deciding factor in almost all elections.
While making his third bid in 2004, after two failed attempts to get elected to the Lok Sabha, Mr Pranab Mukherjee made it a point to address a crowd of cowherds and beedi-rollers. His constituency ~ Jangipur ~ is known for an economy that thrives on cattle sent to Bangladesh’s food markets in addition to the beedi industry. As an elected representative for Jangipur, he has always been a champion of the beedi industry as have been Congress heavyweights Mr Abdul Mannan Hossain and Mr Adhir Chaudhury.
This explains why Mr Mukherjee had tried to fend off former Union health minister Mr Ambumani Ramadoss’s efforts to place pictorial warnings on beedi packets. Mr Ramadoss’s ambitious plan to introduce pictorial warnings on packets of tobacco products was scuppered with Mr Pranab Mukherjee, then external affairs minister and head of the group of ministers looking into the issue of pictorial warning, declaring that pictorial warning on packets of cigarettes and other tobacco products could not be “totally repulsive”. The Union ministry of health and family welfare eventually deferred its plan to introduce legislation making pictorial warning compulsory on packets of beedi and other tobacco products within six months from 1 December, 2008. Incidentally, two of the largest beedi manufacturing centres in the country are Jangipur in West Bengal and Gondia in Maharashtra. While Jangipur is Mr Mukherjee’s Lok Sabha constituency, Union minister of heavy industries Mr Praful Patel hails from Gondia. Gondia’s eight beedi manufacturing units, including those owned by Mr Patel’s CeeJay Group, employ about 60,000 people.
Beedi factory owners in Murshidabad confess that most of them owe allegiance to the Congress and that such an association helps their business. The owners of Bengal’s largest-selling beedi brand, Pataka Beedi, is now involved in a food park project in Jangipur. The owners were in news a few years ago after buying Dunlop House. Jangipur’s beedi industry, a small-scale industry in that belt, posts an annual revenue of Rs 900 crore and holds the key to electoral prospects. A lower-level Congress worker in Lalgola said on condition of anonymity that beedi factory owners were also major contributors to party funds.
No wonder, government after government has tried to preserve the interest of the beedi industry ~ a powerful vote bank any day. After all, the Left Front was a UPA-I ally till 2008 and Trinamul Congress is a key ally of UPA-II. Rightly said British writer Ernest Benn: “Politics is the art of looking for trouble, finding it whether it exists or not, diagnosing it incorrectly, and applying the wrong remedy.”
(The writer is on the staff of The Statesman)