Growers unhappy over hike in excise duty on tobacco products

New Delhi, March 9 (IANS) Does the tax raised by finance minister have a direct impact on the livelihood of people, especially farmers? In the case of tobacco cultivators, it is very true, says their representative body.

According to the represenatives, in all, 25 tobacco farmers have committed suicide in the last two years. They attribute this to a variety of factors which contribute to stress among tobacco growers, including the constant increase in excise duty on the product.

Forty-year-old Ventakeshwar Rao, a tobacco farmer in West Godavari district of Andhra Pradesh, committed suicide last year when he was unable to pay back his debt.

“Rao, like most other tobacco farmers who committed suicide, was struggling to pay off accumulated loans mostly taken from money-lenders to meet the growing cost of cultivation as well as urgent family needs,” B.V. Javare Gowda, president of the Federation of All India Farmers Associations (FAIFA), told IANS.

He said the problem faced by tobacco growers was more acute in Andhra Pradesh and Karnataka, two states with the highest tobacco cultivation in the country.

Gowda said high level of taxation ultimately impacts demand and it has an impact on the price that a farmer gets. For the government, which seeks to curb use of tobacco, the issue has its own set of complications.

Finance Minister Arun Jaitley last month announced an increase in excise duty on tobacco products by 10-15 percent in the 2016-17 budget.

According to Tobacco Institute of India, there were over two lakh tobacco growers in the country and the industry provides further employment to lakhs of others. Among the tobacco grown is FCV (Flue-Cured Virginia) – which is used in making cigarettes.

Minister of State for Health Shripad Yesso Naik admitted it was a controversial issue.

“We cannot directly support the tobacco industry as tobacco is injurious to health. At the same time we also cannot ignore the deaths of the tobacco farmers, The government will listen to their problems and see what can be done,” he said.

According to Tobacco Institute of India, exports are estimated to earn more than Rs.6,000 crore in foreign exchange with FCV tobacco alone contributing Rs.4,000 crore.

Gowda said that cultivation cost of one kg of tobacco is about Rs.100 and the price that a farmer gets has steadily come down from 115 per kg to Rs.85 per kg in the last two years.

He said tobacco farming was becoming unremunerative and the government decision to hike excise will further shrink demand.

While the industry faces high level of taxation, there are also complaints that the government was not strictly enforcing its policy of pictorial warnings on foreign cigarettes.

Murali Babu, general secretary of FAIFA, said the government should strictly enforce pictorial warnings on foreign cigarette brands.

Gowda said the health ministry has issued a directory to revise graphic health warnings on tobacco products which stipulates an increase from the existing warning of 40 percent of the pack front to 85 percent on both sides from April 1, 2016.

He said India was the third largest tobacco producer in the world but the production was fluctuating over the years, and added that many farmers have opted out of tobacco farming due to losses.

FAIFA has also sought intervention of Prime Minister Narendra Modi to look into their problems.

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