Finance Minister Nirmala Sitharaman announced a 16 per cent hike of NCCD on cigarettes on Wednesday.
Experts believe that a significant increase in cigarette taxes and stricter legislation will not only get the most out of human capital by improving residents’ health, but will also assist Prime Minister Narendra Modi achieve his aim of a five trillion dollar economy by 2025.
Arvind Mohan, Professor and Head, Department of Economics, University of Lucknow, stated that a significant rise in tax on these fatal commodities will cover the gap, noting that the health care burden in India is roughly 1.04 percent of GDP, forcing many into poverty.
According to analysts, tobacco taxing may be a very successful strategy for generating income because the product is elastic in nature, therefore a high tax will have no negative influence on the government’s revenue collections.
Following the Budget release, the shares of ITC, one of the biggest cigarette brands, fell.
India is one of the 182 nations that have signed the WHO Framework Convention on Tobacco Control, which mandates a tax of at least 75% on the retail price of all tobacco products. In India, however, cigarettes are taxed at 52.7 percent, ‘bidis’ at 22%, and chewing tobacco at 63.8 percent.
According to the Global Adult Tobacco Survey-India (GATS-2016-17), over 27 million individuals aged 15 and up used tobacco in some form or another. India is the world’s second largest tobacco user and third largest producer.
