FOR years, Indian finance ministers have found the tobacco industry to be a reliable source of funding, as it helped them bridge fiscal deficits. Finance ministers presenting their budgets in parliament inevitably announce a stiff hike in excise duty on cigarettes, making smokers pay for the excesses in public spending.

But last week, the government announced plans to tighten anti-smoking norms, rattling the tobacco industry, which has been on a downslide for decades. India is the second-largest producer and exporter of tobacco — next only to China — and almost 40m people are dependent on it for their livelihood.

Tobacco, however, is a killer commodity and every year nearly a million people die in India, succumbing to diseases caused by consuming tobacco. Healthcare activists predict that by 2020, tobacco will claim the lives of almost 1.5m people annually.

Yet, despite the growing awareness about the dangers posed by tobacco, governments — both at the centre and in the states — have not been able to do much to curb its consumption, mainly because of the close links of politicians to the sector. While the government has been able to impose curbs on cigarette smoking — more than 100bn cigarettes are smoked every year in the country — little has been done to counter smoking beedis, more than a trillion of which are smoked every year.

Healthcare activists have warned that by ignoring the beedi sector — which are rolled at home by ordinary people — and not taxing the product, the government is forcing the young to take to the product. Strict curbs on domestic cigarette brands also results in a proliferation of smuggling of cigarette packets.

Many state governments have imposed bans on the consumption of ‘gutka’, a tobacco-based stimulant, which is highly addictive and popular among labourers and drivers, but which leads to horrific cases of oral cancer. Despite the bans though, ‘gutka’ is widely available and consumed in huge quantities.

Tobacco growers are a powerful lobby especially in the southern states of Andhra Pradesh and Karnataka — which together account for about 80pc of the more than 100m kg of tobacco grown in India. There are about 100,000 registered tobacco cultivators in these two states. Tobacco is grown on nearly 0.5m hectares of land in India.

About 75pc of the people whose livelihood is dependent on tobacco live in rural areas; the remaining 10m are involved in processing, manufacturing and exports of tobacco and related products.

But it is not just smokers and other consumers of tobacco who are addicted to it; even governments have developed a craving for the taxes that are imposed on it. According to a recent report by the Associated Chambers of Commerce and Industry of India (Assocham), it contributes nearly $4bn to the national exchequer, by way of excise duty and foreign exchange earnings. Tobacco worth nearly $1bn is exported every year.

Not surprisingly, though India is a signatory to the Framework Convention on Tobacco Control (FCTC), a global public health treaty which came into force nearly 10 years ago, it has not seriously pursued measures to cut down tobacco consumption. Of course, other tobacco growing countries are also guilty of such acts.

The US, for instance, signed the treaty about 10 years ago, but has refused to ratify it because of strong lobbying by its domestic tobacco industry. Tobacco growers in India are worried that if the country pushes ahead with tough laws, other exporting nations would stand to gain.

LAST week, the central government announced that it had accepted the suggestions of an expert committee and decided to ban the sale of loose or single stick cigarettes, besides increasing the minimum legal age for sale of tobacco products to those above 25. The government also aims to increase the fine for smoking in public.

According to health minister J.P. Nadda, the government has sought a draft note on the new norms, seeking comments by different ministries. Once the responses are in, the cabinet will clear the changes to the law.

While the anti-smoking lobby hailed the government’s move as progressive, the stock markets hammered the scrips of tobacco companies including ITC Ltd — the country’s largest cigarette maker — Godfrey Philips, VST and Golden Tobacco.

But firms such as ITC have lived through several such crises in the past, and have continued to thrive. Analysts expect the company to come out with smaller packs containing two, three or five sticks, to overcome the new restrictions on the sale of loose cigarettes.

“We believe that cigarette industry may face a risk to near-term consumption (from reduction in consumption arising from cuts, largely in less dependent smokers), and long-term consumption (today’s trials are tomorrow’s dependent users),” said a report by Kotak Securities.

The new norms would ensure that children and the young would not be able to buy loose cigarettes and they may find it difficult to pay about Rs200 for a full packet. But enterprising traders, selling cigarettes in their kiosks by the roadside, can be expected to provide the loose cigarette sticks to their patrons, just as many have been selling ‘gutka’ on the sly.

Healthcare and anti-smoking activists claim that the government has to do a lot more to ensure that the young are discouraged from taking to cigarettes. Else, India’s healthcare costs will soar as ageing people suffering from tobacco-related diseases, move into subsidised, but relatively expensive state-owned hospitals.

India’s efforts at discouraging smoking have hit roadblocks. According to the World Health Organisation, India’s position has slipped to 136th position — from 123rd last year — in a list of 198 countries who were assessed on the health warnings issued on cigarette packets. The government recently directed that health warnings will have to be printed across 85pc of the surface of cigarette packets.

Published in Dawn, Economic & Business, December 1st , 2014