For every Rs 100 received as excise taxes from tobacco products, Indian economy loses Rs 816
- Economic cost attributable to tobacco use from all diseases and deaths between 2017 and 2018 for persons over 35 years is US$ 27.5 billion (INR 1773.4 billion)
- Tax revenue from tobacco in 2016-2017 was 12.2% of its economic costs
- Smoking contributed 74%, smokeless tobacco use contributed 26% of the costs
- Men accounted for 91% of the total economic burden related to tobacco, while women accounted for the remaining 9%
The economic burden of diseases and premature deaths attributable to smoking and smokeless tobacco use by persons over 35-years of age in India at over 1% of India's GDP, estimates the Economic Costs of Diseases and Deaths Attributable to Tobacco Use in India study by World Health Organization (WHO).
The direct health expenditure on treating tobacco related diseases alone accounts for 5.3% of total private and public health spending in India in a year — a drain on both the public health system and the economy, which no country can afford.
According to Dr Roderico H. Ofrin, WHO Representative to India, “Health-care costs linked to tobacco use have increased by 21% from 2011 to 2018 and consume a significant proportion of the government’s investment in health including efforts towards achieving universal health coverage. This report shows that through the implementation of a comprehensive package of strong tobacco control policies outlined in the WHO Framework Convention on Tobacco Control (FCTC), India can avert millions of preventable deaths as well as mitigate the damage of tobacco use on both society and the economy.”
“There is a continued need to frame, strengthen and implement bold, evidence-based policies. Tobacco control is a major priority for the Government of India and WHO is committed to supporting the country in this endeavor,” said Dr Ofrin.
A major risk factor for noncommunicable diseases (NCDs), tobacco-use causes the death of over 8 million people per year around the world.
In India, tobacco-related cancers accounted for 27% of the country’s cancer burden in 2020, according to the Indian Council of Medical Research.
With nearly 29% adults using tobacco, India is the second leading consumer of tobacco products after China. The result is a catastrophic death toll of close to 13.5 lakh preventable deaths per year
The study has estimated three major categories of costs incurred:
(1) direct costs of medical expenditure — cost of surgeon fees, tests, medicine, bed charges and nonmedical expenditures like transportation and lodging of caregivers;
(2) indirect morbidity costs covering household income during hospitalization or outpatient visits; and
(3) indirect mortality costs of premature deaths attributable to tobacco use.
Key findings
- The estimated economic cost of tobacco was about 1% of GDP in 2017–18.
- For every INR 100 received as excise tax from tobacco products in 2016-17, the country incurred INR 816 of costs through the consumption of tobacco.
- Direct medical costs due to tobacco-attributable diseases amounted to US$ 5.8 billion (INR 37 344 crore), while the direct non-medical costs amounted to US$ 211 million (INR 1364 core).
- The lost income for households due to hospitalization and hospital visits amounted to US$ 957 million (INR 6181 crore), whereas the cost from premature death was estimated at INR US$ 20.5 billion (132 452 crore).
- The tobacco attributable direct medical expenditure alone amounted to about 5% of the total private and public expenditure on health in 2017-18.
- The smoking attributable costs amounted to 74% and the SLT attributable costs were 26%.
- Men accounted for 91% of the total economic burden, while women accounted for 9%.
- Out of the total economic burden attributable to tobacco-related diseases, about 93% of the costs were borne by those in the age group 35-69, while those 70 and above shared the remaining 7%.
Way forward
Tobacco use impoverishes families, impacts their well-being, increases inequalities, and damages both the society and the economy. These impact global efforts to achieve Sustainable Development Goals (SDGs), which envision a more equitable, healthy and sustainable world. Tobacco revenue is fundamentally at odds with public health initiatives and not a sustainable economic growth strategy.
This study establishes that tobacco consumption is a major resource drain on India’s national exchequer and harming India’s present and future generations. A key recommendation is greater regulation of tobacco through comprehensive fiscal and non-fiscal policies through increasing taxes on tobacco products on an annual basis, without exception, to make all tobacco products unaffordable. In addition, greater investment in the National Tobacco Control Programme (NTCP) will also fast-track implementation of tobacco control and broad-based MPOWER package of policies and interventions to reverse the tobacco epidemic.