Fewer puffs

Calcutta, Jan. 22: Health freaks can now heave a sigh of relief. The sustained campaign against smoking seems to be paying off.

Figures culled by the Tobacco Institute of India show that the consumption of cigarettes in India has come down by 20 per cent in the past 15 years. However, there still remains a worrying point: consumption of other traditional products, such as bidi, has seen as much as 30 per cent increase during the same period.

The rise in the share of non-tobacco sales in ITC?s overall revenue during the October-December period corroborates the institute?s findings.

The Tobacco Institute of India is certainly not happy with the decline in cigarette smoking.

Tobacco News, through which the institute articulates the industry views from time to time, has noted in a pre-budget issue that consumption of cigarettes have come down primarily because of heavy excise duty on the manufacturers while traditional tobacco products have a much lower burden.

Consumption of flue-cured Virginia (FCV) tobacco, which is used to make cigarettes, has come down to 70 million kg in 2004-05 from 86 million kg in 1981-82.

The institute noted that the consumption of traditional tobacco products has gone up to 416 million kg from 320 million kg during the same period.

The excise duty collection from cigarettes is expected to be around Rs 7,100 crore at the end of current fiscal while other tobacco products manufacturers would pay just about Rs 1134 crore.

The industry claimed that it has largely absorbed the 10 per cent excise duty hike in the 2005-06 budget.

?Four years ago, the government took a bold decision ? it left excise duty rates on cigarettes unchanged. This was followed by two years of tax stability on cigarettes. This pragmatic decision has begun to yield promising results,? the institute said while seeking an equitable tobacco taxation policy.

The industry wants an equitable taxation policy to widen the base for higher revenue from tobacco products. Higher taxation on traditional tobacco products could turn the declining cigarette-smoking trend.

Yield from excise duty on cigarettes is likely to grow 33 per cent cumulatively between 2001-02 and 2005-06 with the highest year-on-year growth of 15 per cent estimated for the current year.