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 Table of Contents  
Year : 2017  |  Volume : 61  |  Issue : 2  |  Page : 131-133  

Economic implications of tobacco industry in India: An overview

1 Postgraduate Student, Department of Public Health Dentistry, Ragas Dental College and Hospital, Chennai, Tamil Nadu, India
2 Senior Lecturer, Department of Public Health Dentistry, Meenakshi Ammal Dental College and Hospital, Chennai, Tamil Nadu, India
3 Professor and Head, Department of Public Health Dentistry, Ragas Dental College and Hospital, Chennai, Tamil Nadu, India

Date of Web Publication2-Jun-2017

Correspondence Address:
Khushbu Sharma
Department of Public Health Dentistry, Ragas Dental College and Hospital, 2/102, East Coast Road, Uthandi, Chennai - 600 119, Tamil Nadu
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Source of Support: None, Conflict of Interest: None

DOI: 10.4103/ijph.IJPH_245_15

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Tobacco usage has become engraved in the cultural practices of our country since time immemorial. With increased demand comes increased production, employment, and growth of the tobacco industry but for a deadly cost of human lives which fall prey to its use in either forms. In this article, we describe the economic burden faced by the country due to the emerging tobacco epidemic. The need of the hour is to understand the impact faced due to the tobacco industry in the country and to bring in appropriate efforts to reduce loss of economy and human lives.

Keywords: Economic burden, health, India, tobacco

How to cite this article:
Sharma K, Junaid M, Diwakar MK. Economic implications of tobacco industry in India: An overview. Indian J Public Health 2017;61:131-3

How to cite this URL:
Sharma K, Junaid M, Diwakar MK. Economic implications of tobacco industry in India: An overview. Indian J Public Health [serial online] 2017 [cited 2023 Mar 26];61:131-3. Available from:

   Introduction Top

Tobacco use patterns in India are unique and reflect long-standing cultural practices.[1] This country stands as the third largest producer of tobacco and fifth largest exporter in the world contributing enormously to its overall economic growth.[2] On the other side of the spectrum, the human and economic losses due to the usage of the same are also huge. The Global Adults Tobacco Survey, India, revealed that more than one-third (35%) of adults in India use tobacco in some form or the other.[3] The total number of tobacco-related deaths in our country stands at 9 million as of 2009, and if current trends continue, by 2020, tobacco use will account for 13% of all deaths in India.[4] The current complex economic situation thus demands thoughtful, innovative solutions to tackle the tobacco burden without affecting income from its production.

   Contributions by Tobacco Industry to Indian Economy Top

India has a prominent place in the production of tobacco in the world due to varied agroclimatic conditions and different types of tobacco it produces. The arable land area in India comprises of 54.3% in which presently, tobacco is being cultivated in an area of about 4.93 lakh hectares (0.24%) covering different styles/types of tobacco with a production of 800 million kg in the year 2013–2014, mainly from the states of Andhra Pradesh, Karnataka, and Gujarat.[2]

The Tobacco Board, constituted by the Government of India (GOI), under an Act of Parliament known as the “TOBACCO BOARD ACT, 1975,” claims that it has a major contribution to economy with its employment generation in agriculture and manufacturing and revenues in the form of exports and taxes.[2] According to the World Bank Report, the tobacco industry estimates that 33 million people are engaged in tobacco farming, of which 3.5 million are in India.[4] By 2012–2013, the Indian tobacco industry provided employment directly and indirectly to 36 millions of people which include 7 million farmers. The tobacco industry also contributed as much as Rs. 19,891.50 crores as excise duty and Rs. 4979 crores in terms of foreign exchange to the national exchequer, during 2012–2013.[2]

Health economics and burden due to tobacco use in India

Health care costs from tobacco use impose burden on annual health budgets, especially in developing countries like India.[1] The costs of tobacco consumption were related to personal costs such as those arising from the consumption per se, costs of adverse health effects and their medical care as well as the social costs of tobacco such as those related to loss in productivity and damage to the environment.[5]

In the year 2002–2003, India spent approximately Rs. 300 billion (US$ 6.2 billion) in public and private spending on the treatment of tobacco-related illnesses.[6] Another study found that the direct cost of treating four major tobacco-related noncommunicable diseases amounted to Rs. 54 billion (US$ 1.2 billion) in 2004, or 4.7% of India's national health care expenditure that year.[7] This estimate raised to Rs. 104,500 crores in the year 2011, of which 16% were related to direct costs and 84% were related to indirect costs.[8]

The direct medical costs attributable to the tobacco-related diseases were Rs. 16,800 crores, indirect costs were Rs. 14,700 crores, and costs related to premature deaths were Rs. 73,000 crores. Males contribute 91% of total economic burden while females accounted for the rest. The contribution from females was higher (29%) for smokeless tobacco use. Treatment costs toward different diseases related to tobacco use were Rs. 3600 crores for cardiovascular diseases (CVDs), Rs. 2800 crores for respiratory diseases, Rs. 2300 crores for tuberculosis, and for cancers were Rs. 1400 crores.[8]

The total economic burden was variable among the different states in the study. Uttar Pradesh contributed to highest (28%) of the estimated burden followed by West Bengal (13%) and Andhra Pradesh (12%). Four states (West Bengal, Maharashtra, Andhra Pradesh, and Uttar Pradesh) together contributed 60% of burden due to CVD. Tamil Nadu, Uttar Pradesh, and West Bengal shared 52% of burden due to cancers. Uttar Pradesh and West Bengal contributed 47% from respiratory disease. Thirteen percent of tuberculosis burden was in Uttar Pradesh alone.[8]

The report had compared the estimated costs of tobacco with a few important macroeconomic indicators from India. The estimated Rs. 104,500 crores (US$ 22.4 billion) economic cost of tobacco was found to be 1.16% of the gross domestic product. This was 12% more than the combined state and central government expenditures on health in 2011–2012. The total central excise revenue from all tobacco products combined in the same year amounted only to 17% of the economic costs of tobacco.[8]

Antitobacco activities and its economic implications

The National Tobacco Control Cell launched under the National Tobacco Control Programme is responsible for overall policy formulation, planning, monitoring and evaluation, and effective implementation of the Tobacco Control Laws.

Expenditure on National Tobacco Control Programme

The GOI for the year 2007–2008, has allocated approximately USD 8 million (Rs. 40 crores) for tobacco control.[9] The allocated finance was distributed for state- and district-level programs which included training of stakeholders, state- and district-level public awareness campaign, and monitoring tobacco control laws and reporting. The National Tobacco Control Programme in India invested at the State Level Rs. 752,000 as annual budget and Rs. 100,000 as training budget. The contribution at district level was Rs. 1,348,000 as annual budget and Rs. 80,000 as training budget.[9]

Taxation system in tobacco industry

The prevailing tax system is not in accordance with the consumption pattern. Taxes on cigarettes are already low and that on bidis are close to zero. Studies of price elasticities in India find that a 10% increase in tobacco prices is estimated to reduce bidi consumption by 9.1% and cigarette consumption by 2.6%.[10] A study coordinated by the National Institute of Public Finance and Policy in 2010, demonstrated that the health impact of a 52.8% increase in bidi price would be 4.6 million averted premature deaths in current smokers and generate Rs. 36.9 billion (or $0.8 billion) for the government.[7] An increase of cigarette prices by 158% would avert an additional 1.8 million premature deaths in current smokers and generate Rs. 146.3 billion (or $3.1 billion).[7] There could also be an increased amount of turnover with the strict enforcement of all the tobacco laws in the country.

Tobacco cessation clinics

These clinics started functioning in 13 centers across India on May 31, 2002, on the World No Tobacco Day. Since the year 2002, 34,741 cases were registered across the 18 TCC in India; 92% were men and 8% were women.[11]

   Conclusion Top

Although the tobacco industry contributes to a huge foreign exchange and excise duty and extensive employment opportunities, it is at the cost of human lives; to advocate a blanket ban of tobacco production in India seems to be impossible. With such a complex economic situation, focus should shift toward reducing the demand of tobacco with effective tobacco control measures (legal, service, education, and primary health-care approach) and rehabilitating those who are employed (directly or indirectly) with the tobacco industry. Alternate use of tobacco crop should be a norm to sustain employment. Recent research has brought into forth use of tobacco seeds as a source of renewable energy;[12],[13] scientists and administrators alike should be appraised of these findings thereby creating a scenario wherein we can use an agent which symbolized darkness as a one that lightens every household of our country.

Financial support and sponsorship


Conflicts of interest

There are no conflicts of interest.

   References Top

Sonaliya KN. The economics of tobacco in India. Natl J Med Res 2012;2:243-4.  Back to cited text no. 1
Annual Report 2013-2014 – Tobacco Board India. Ministry of Commerce. Government of India; 2014.  Back to cited text no. 2
Global Adult Tobacco Survey; GATS – India 2009-2010. Ministry of Health and Family Welfare. Government of India; 2010.  Back to cited text no. 3
Mishra GA, Pimple SA, Shastri SS. An overview of the tobacco problem in India. Indian J Med Paediatr Oncol 2012;33:139-45.  Back to cited text no. 4
[PUBMED]  [Full text]  
Ekpu VU, Brown AK. The economic impact of smoking and of reducing smoking prevalence: Review of evidence. Tob Use Insights 2015;8:1-35.  Back to cited text no. 5
John RM, Sung HY, Max W. Economic cost of tobacco use in India, 2004. Tob Control 2009;18:138-43.  Back to cited text no. 6
John RM, Rao RK, Rao MG, Moore J, Deshpande RS, Sengupta J, et al. The Economics of Tobacco and Tobacco Taxation in India. Paris: International Union against Tuberculosis and Lung Disease; 2010.  Back to cited text no. 7
Ministry of Health and Family Welfare, Government of India. Economic Burden of Tobacco Related Diseases in India-Executive Summary; 2011.  Back to cited text no. 8
Operational Guidelines, National Tobacco Control Programme, National Tobacco Control Cell Ministry of Health and Family Welfare Government of India; 2012.  Back to cited text no. 9
John RM. Price elasticity estimates for tobacco products in India. Health Policy Plan 2008;23:200-9.  Back to cited text no. 10
Kaur J, Jain DC. Tobacco control policies in India: Implementation and challenges. Indian J Public Health 2011;55:220-7.  Back to cited text no. 11
[PUBMED]  [Full text]  
Veljkovic VB, Lakicevic SH, Stamenkovic OS, Todorovic ZB, ML Lazic ML. Biodiesel production from tobacco (Nicotiana tabacum L.) seed oil with a high content of free fatty acids. Fuel 2006;85:2671-5.  Back to cited text no. 12
Sharma K, Diwakar MP, Balakrishnan K, Gopalakrishnapillai SV. Biodiesel Production from Tobacco (Nicotiana Tabacum) Seed Oil. J Earth Environ Health Sci 2015;1:61-5  Back to cited text no. 13


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