Economics of Smokeless Tobacco
Dr Shankar Prinja Associate Professor of Health Economics School of Public Health Post Graduate Ins tute of Medical Educa on and Research Chandigarh Outline
• Microeconomics
• Macroeconomics
• Poli cal Economy
• Cost-effec veness of Interven ons 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 smokeless tobacco 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. Taxa on of smokeless tobacco in India. Indian journal of cancer. 2014 Dec 1;51(5):8 Contribution of SLT Tax
Rout SK, Arora M. Taxa on 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. Taxa on 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 Ra o of WPI to per capita income 0 2006 2007 2008 2009 2010 2011 2012
Rout SK, Arora M. Taxa on 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 ter les. Further Research Needs
• Price elas city es ma ons should also include effect of income elas city and cross-price elas city
• Price elas city is highly dependent on income levels: hence should be updated regularly
• Elas city effects should be es mated separately for never-users, and those who are chronic users
• Effect of GST applica on on price, tobacco consump on 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 produc vity
• 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 es mates using be er 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 Mumbai cohort for rela ve risks: need to have more representa ve data
• Es mates need to be updated with recent NSSO data (2014-15) Political Economy
• 7 million workforce: 1.5% of total formal sector employment
10% 27% Cul va on
Manufacture
Trade 63% Case studies- India
• In another study in Gujarat, it was observed that farmers who had switched from tobacco to mul ple cropping/intercropping with co on had a higher net return per hectare. • Likewise, tobacco farmers in Andhra Pradesh who were forced to grow alternate crops (such as pulses, gingelly, maize and soybean) in 2000 due to drought condi ons found that these crops were viable alterna ves to tobacco and that the cost of cul va on was also cheaper.
• Kaur S. “Tobacco cul va on in India: me to search for alterna ves,” in Tobacco and poverty: observa ons from India and Bangladesh, eds. Efroymson, D, FitzGerald, S. PATH Canada, 2002 • Sharma R S. Hobson’s choice for AP tobacco farmers. Business Line: internet edi on. 24 March 2000. Alternatives to tobacco production Further Research Needs
• Assess the techno-commercial viability of alterna ve farming
• Impact of tobacco on farmers health
• Possible alternate uses of tobacco crop itself
• Develop agricultural subsidy products for alterna ve farming to incen vize farmers
• Evaluate the effect of tobacco crop on soil erosion
• Involve agricultural universi es Prinja S et al (2015). Applied Health Econ Health Policy. Tax: A Dominant Option
• SLT Tax Collec on: 1429 crore INR
• Direct medical expenditure: 5257 crore INR
• Total economic burden: 23,364 crore INR SLT control mass media campaign
• Data from a na onally representa ve household survey of 2898 smokeless tobacco users were compared with campaign costs in a standard cost-effec veness methodology • It successfully generated 17, 259, 148 addi onal quit a empts, 431 479 permanent quits and 120 814 deaths averted. • The cost per benefit was US$0.06 per quit a empt, 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-effec veness 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 es mates and upda ng these • Robust Research in the field of tobacco farming versus alterna ves needs to be explored • Need to create awareness programs for farmers • Significant research needs to be done on the tobacco industry prac ces • Adver zing • Marke ng Thanks
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