Economics of Smokeless Tobacco Dr Shankar Prinja Associate Professor of Health Economics School of Public Health Post Graduate Ins<tute of Medical Educaon 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. Taxaon of smokeless tobacco in India. 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 RaDo 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 ter<les. Further Research Needs • Price elas<city es<maons 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 apPlicaon 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 beier 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 relave risks: need to have more rePresentave 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<vaon 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 coion 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 alternaves to tobacco and that the cost of cul<vaon was also cheaper. • Kaur S. “Tobacco cul<vaon in India: <me to search for alternaves,” in Tobacco and Poverty: observaons 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 alternave farming • ImPact of tobacco on farmers health • Possible alternate uses of tobacco croP itself • DeveloP agricultural subsidy Products for alternave 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 naonally rePresentave 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 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-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 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 Prac<ces • Adver<zing • Marke<ng Thanks Email: [email protected] .