Economics of Smokeless

Dr Shankar Prinja Associate Professor of Health Economics School of Public Health Post Graduate Instute of Medical Educaon and Research Outline

• Microeconomics

• Macroeconomics

• Polical Economy

• Cost-effecveness of Intervenons Consumption Patterns

GATS-2 (2016-17) GATS -1 (2009-10) 8.7 4 7 20.6 18

65.4 71 5.3

Only smokers Only Users of both types of tobacco Non users SLT Tax

Basic Excise Duty Year (%) Ad Valorem

2003-04 34

2008-09 50

2013-14 60

Rout SK, Arora M. Taxaon of smokeless tobacco in . Indian journal of cancer. 2014 Dec 1;51(5):8 Contribution of SLT Tax

Rout SK, Arora M. Taxaon of smokeless tobacco in India. Indian journal of cancer. 2014 Dec 1;51(5):8 Impact of SLT Tax on Wholesale Price

Rout SK, Arora M. Taxaon of smokeless tobacco in India. Indian journal of cancer. 2014 Dec 1;51(5):8 Impact of SLT Tax on Retail Price Affordability of SLT

0.004

0.0035

0.003

0.0025

0.002 Zarda 0.0015 Chewing Tobacco

0.001

0.0005 Rao of WPI to per capita income 0 2006 2007 2008 2009 2010 2011 2012

Rout SK, Arora M. Taxaon of smokeless tobacco in India. Indian journal of cancer. 2014 Dec 1;51(5):8 Price elasticity of SLT

Authors Year Findings

John RM et al 1999-2000 Leaf tobacco −0.874 in urban areas and −0.871 in rural areas.

Joseph RA et al 2009 Gutka= - 0.58

Selvaraj et al 2011–2012 Leaf tobacco −0.557 in poorest −0.4537 in middle wealth terles. Further Research Needs

• Price elascity esmaons should also include effect of income elascity and cross-price elascity

• Price elascity is highly dependent on income levels: hence should be updated regularly

• Elascity effects should be esmated separately for never-users, and those who are chronic users

• Effect of GST applicaon on price, tobacco consumpon and revenue Macroeconomic Impact of SLT

• Direct medical expenditure for treatment (cancer, CVD, TB and respiratory) • Indirect medical expenditure • Travel • Expenditure of caregivers • Indirect costs due to morbidity • Absence from work • Reduced producvity

• Indirect costs due to premature mortality Macroeconomic Impact of SLT

• Rath and Chaudhry: All forms of tobacco • INR 303 billion (2002-03 prices) • 85% due to premature mortality

• John RM et al (2004) • Total: 1.7 billion US$ • SLT: 38.9 million US$ • CVD contributed majority

• John et al (2014) • Total: 1044 billion US$ • SLT: 24% Macroeconomic Impact of SLT Costs of SLT by Gender

120

100 12.45 28.7 80 42.31 65.96 60 Female

40 87.55 Male 71.3 Smokeless Tobacco 57.69 20 34.04 Percentage (%) of Total Cost of

0 Direct Medical Cost Indirect morbidity Indirect Medical Cost Total Costs Cost Further Research Needs

• Need to harmonize methods for macroeconomic burden

• Need to update esmates using beer data on health system cost in public sector

• Improve methods to analyse indirect costs: how to value those in the informal sector and home-makers

• All studies use a cohort for relave risks: need to have more representave data

• Esmates need to be updated with recent NSSO data (2014-15) Political Economy

• 7 million workforce: 1.5% of total formal sector employment

10% 27% Culvaon

Manufacture

Trade 63% Case studies- India

• In another study in , it was observed that farmers who had switched from tobacco to mulple cropping/intercropping with coon had a higher net return per hectare. • Likewise, tobacco farmers in who were forced to grow alternate crops (such as pulses, gingelly, maize and soybean) in 2000 due to drought condions found that these crops were viable alternaves to tobacco and that the cost of culvaon was also cheaper.

• Kaur S. “Tobacco culvaon in India: me to search for alternaves,” in Tobacco and poverty: observaons from India and , eds. Efroymson, D, FitzGerald, S. PATH Canada, 2002 • Sharma R S. Hobson’s choice for AP tobacco farmers. Business Line: internet edion. 24 March 2000. Alternatives to tobacco production Further Research Needs

• Assess the techno-commercial viability of alternave farming

• Impact of tobacco on farmers health

• Possible alternate uses of tobacco crop itself

• Develop agricultural subsidy products for alternave farming to incenvize farmers

• Evaluate the effect of tobacco crop on soil erosion

• Involve agricultural universies Prinja S et al (2015). Applied Health Econ Health Policy. Tax: A Dominant Option

• SLT Tax Collecon: 1429 crore INR

• Direct medical expenditure: 5257 crore INR

• Total economic burden: 23,364 crore INR SLT control mass media campaign

• Data from a naonally representave household survey of 2898 smokeless tobacco users were compared with campaign costs in a standard cost-effecveness methodology • It successfully generated 17, 259, 148 addional quit aempts, 431 479 permanent quits and 120 814 deaths averted. • The cost per benefit was US$0.06 per quit aempt, US$2.6 per permanent quit and US$9.2 per death averted.

Murukutla N, Yan H, Wang S, Negi NS, Kotov A, Mullin S, Goodchild M. Cost-effecveness of a smokeless tobacco control mass media campaign in India. Tobacco Control. 2017 Aug 10:tobaccocontrol-2016. Conclusion SLT Economics: Training and Research Needs

• Significant evidence exists on SLT economics • Scope of refining the esmates and updang these • Robust Research in the field of tobacco farming versus alternaves needs to be explored • Need to create awareness programs for farmers • Significant research needs to be done on the tobacco industry pracces • Adverzing • Markeng Thanks

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