India's Real Tobacco Problem
Most bidis are hand-rolled in small home operations.
Starting next month, the government of India will require that cigarette packs be largely covered in graphic warning labels. That's smart; in other countries, such warnings have effectively pushed smokers to quit. The trouble is that cigarettes aren't India's biggest tobacco problem.
Most Indians who smoke, smoke a much cheaper, unfiltered product called a bidi: shredded tobacco wrapped in a "tendu," or ebony, leaf and tied with a string. Popular among the poor -- a pack can cost as little as 10 cents -- bidis in 2009 accounted for 85 percent of smoked tobacco in India. Bidis have lower tobacco content than cigarettes, but more nicotine, tar and carbon monoxide. Stick for stick, they're deadlier.
Yet successive governments have shied away from discouraging bidi smoking. The new law requires warning labels on only one side of bidi packs. And bidis are barely taxed. As of 2013, the excise burden on bidis barely topped 5 percent; the World Health Organization recommends 70 percent. (National excise taxes on cigarettes, at less than 40 percent of the retail price, could stand to be somewhat higher, too.) Handmade bidis are taxed even less than machine-made ones are, and those made by the smallest producers are exempt altogether. This encourages a sprawling rural industry in which women roll bidis at home for little pay.
Defenders say higher taxes would make bidis unaffordable to the poorest Indians. But that's precisely how a tax would benefit public health. India has the world's second-largest population of smokers after China -- more than 100 million people -- and more than a million tobacco-related deaths each year. In 2011, the Ministry of Health and Family Welfare estimated that the economic cost attributable to tobacco use had reached $22.4 billion, more than the central and local governments spent on health care that year.
Yet in India, unlike in the U.S. and Europe, the number of smokers continues to grow. And fewer than 5 percent of adult smokers in India ever quit.
To get them to kick their habit, two things need to change. First, bidis need to be brought out of the shadows to make them more easily taxable. Eliminating the distinction between handmade and machine-rolled sticks would drive production into factories, where output could be more accurately measured. And tobacco growers should be required to report sales, and bidi-makers to report purchases. Unbranded bidis -- which account for more than half of production -- should be banned outright.
Then, taxes on bidis should be raised drastically. Studies suggest that a 10 percent rise in prices could cut bidi consumption by more than 9 percent. Raising bidi taxes to 98 rupees (around $1.50) per 1,000 sticks could prevent more than 15 million premature deaths, the World Health Organization estimates. Those are savings India can't afford to pass up.
To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at firstname.lastname@example.org.