Beedis are fine, but smoking cigarettes stick by stick is injurious to health

beedisNews-reports suggest that the government is planning to ban the sale of loose cigarettes. Sagarika Mukherjee an analyst with SBI Caps points out that 70% of the cigarettes sold in India are sold loose.
Further, a November 26
news-eport in the Mumbai Mirror says “The union health ministry on Tuesday recommended a ban on the sale of unpackaged cigarettes to deter smokers from graduating to buying full packs.”
The health minister JP Nadda said in the Rajya Sabha on November 25 that the ministry had accepted the recommendations of a seven member committee on the “prohibition on sale of loose or single stick of cigarette, increasing the minimum legal age for sale of tobacco products, increasing the fine or penalty amounts for violation of certain provisions of the Act as well as making such offences cognizable”.
On the face of it this seems to be a good decision. We all know that cigarette smoking is injurious to health. Nevertheless, before the sale of loose cigarettes is actually banned there are several other points that need to be taken into account.
Governments normally tend to see what is only immediately obvious and ignore the secondary consequences. The economist Henry Hazlitt calls this the broken window fallacy. He explains this through an example in his book
Economics in One Lesson.
A young hoodlum throws a stone at a shop’s window and breaks it. By the time the shopkeeper realises what has happened and comes out of the shop, the boy has already escaped. As often happens in these cases, a crowd gathers around, first trying to figure out what has happened and then offers its own analysis on the scenario. In sometime, the crowd decides rather philosophically that what happened was for the good.
As Hazlitt writes “After a while the crowd feels the need for philosophic reflection…It will make business for some glazier….After all, if windows were never broken, what would happen to the glass business?”
With the shopkeeper now having to repair the window, the glazier would earn more money. He would thus have more money to spend and would spend it in the days to come. And this would benefit other businessmen. “The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be…that the little hoodlum who threw the stone, far from being a public menace, was a public benefactor,” writes Hazlitt.
All this sounds very straightforward. But what it does not take into account is the fact that the shopkeeper would have to spend money in order to get the window repaired. And he may have earmarked to spend the money on something else.
In Hazlitt’s example, the shopkeeper wanted to buy a suit. Now that he has to spend money on getting the window repaired, he would have no money to buy a suit. As Hazlitt writes “The people in the crowd were thinking only of two parties to the transaction, [the shopkeeper] and the glazer. They had forgotten the potential third party involved, the tailor [who would have made the suit]. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye…It is the fallacy of overlooking secondary consequences.”
Many government decisions are plagued with the fallacy of overlooking secondary consequences. The recommendation to ban the sale of loose cigarettes also overlooks several secondary consequences. Also, it stinks of hypocrisy and is the kind of micromanaging which governments should be avoiding.
Typically, most people who buy loose cigarettes are ones who cannot afford to buy a packet at one go. If loose cigarettes are banned will these people stop smoking? Most likely not. They will either save up and buy a packet every few days.
Or they will simply move on to a cheaper substitute, which in this case would be
beedis. Beedis because they do not have a filter are a bigger health hazard than cigarettes with filters are. And chances are the government will end up spending more money in trying to cure tobacco related illnesses, in the years to come.
Further, the question is how will the government implement such a ban? Cigarettes aren’t exactly sold through a few big stores around the country which can be monitored. They are sold by millions of
paan wallahs through the length and the breadth of the country. Mukherjee of SBI Caps puts the number of shops selling cigarettes from anywhere between seven to eight million.
I used to live in Hyderabad in the early 2000s, when the erstwhile Andhra Pradesh government decided to ban
gutka. All that happened was that the paan wallahs stopped displaying gutka packets in the open and started keeping them in their pockets.
Further, they even demanded a premium to the maximum retail price. The police was suitably bribed to look the other way.
Gutka which was freely available in states around Andhra Pradesh continued to be smuggled in.
Another logic offered in support of not allowing the sale of single sticks is that when a packet is sold, it contains graphic images showing the ill-effects of smoking. When loose cigarettes are sold, individuals buying those cigarettes don’t see those graphic images. Hence, sale of loose cigarettes should not be allowed.
Other countries in Asia have banned the sale of loose cigarettes using the logic explained above. So, the cigarette companies there simply moved to producing smaller packets. The committee whose recommendations the health ministry has accepted has already recommended that smaller packets should not be allowed. But this is where you start to discriminate between those who can afford to buy a cigarette pack and those who can’t.
Mukherjee of SBI Caps points out that only 12% of the tobacco consumption in the country happens through cigarettes. And cigarette companies contribute a major portion of the excise duty and other taxes collected from the tobacco industry. So, if the government is serious about tackling tobacco consumption why not look where the real problem is? Attacking the beedi sector will be a difficult thing to do, given that the beedi barons are politically very well connected.
Another thing that needs to be pointed out here is that the government of India owns around one third of ITC, a company which controls 80% of the Indian tobacco market. The Life Insurance Corporation of India owns 14.5% stake, followed by the Specified Undertaking of the Unit Trust of India (SU-UTII) which owns 11.25% and the four general insurance companies together own 6.78% in the tobacco major.
This stake of LIC, SU-UTI and the four general insurance companies, in ITC, as on November 26, 2014, was worth a whopping Rs 94,241 crore. The actual stake of the government will be worth much more once one takes into account the holdings of government owned mutual funds as well.
If the government is serious about discouraging tobacco consumption, the first thing it needs to do is sell its stake in ITC and then take it on from there. This money could be put to good use by helping specialized cancer hospitals in the country to expand their infrastructure or to even set up new ones. Then there is also the case of the government subsidizing fertilizers, a portion of which goes into tobacco farming as well.
The
beedi industry does not face the same kind of taxes that the cigarette industry does. Why not do away with that anomaly? In a recent column Swaminathan Aiyar talks about a column he wrote in 2009. At that point time Indians consumed around one trillion beedis per year against 106 billion cigarettes. If the taxes on beedis and nonfilter cigarettes were equalized it would have yielded an additional revenue of Rs 15,000 crore per year, back then. If taxes on beedis were equalised to the level of tax on a standard filter cigarette, it would have yielded an additional tax of Rs 80,000 crore per year. If such a tax is implemented now, the numbers will be higher.
What all this clearly tells us is that targeting just loose cigarettes doesn’t make any sense. If tobacco consumption is to be brought down, it needs a more holistic solution than what is being currently offered. The current government like most governments before it has fallen victim to the broken window fallacy.

Disclosure: I do not smoke. And I would like to thank PV Subramanyan for explaining several points that I made in this piece.

The article appeared originally on www.equitymaster.com on Nov 27, 2014

Why warnings against smoking could be injurious to health


Vivek Kaul

First it was Naseeruddin Shah. Then came Rahul Bose. He was followed by Irrfan. And now the baton for the thinking woman’s sex symbol seems to have been passed onto Nawazuddin Siddiqui. Siddiqui in his tour de force performance as Faizal Khan (pronounced Faijal) in Gangs of Wasseypur II has firmly made himself an actor to watch out for.
His character is shown to be constantly smoking cigarettes or ganja throughout the movie. In a doped state he promises his mother “baap ka, dada ka, sabka badla lega tera Faijal”. He even tries to impress his girl friend ala Rajinikanth by trying to flip a cigarette first unsuccessfully and then successfully, into his mouth. Given this, the movie does begin with the usual disclaimer “Cigarette smoking is injurious to health. It causes cancer.” The disclaimer appears even after the movie starts again after the interval.
The information and broadcasting ministry now has planned to tighten the screws further on movies which show characters smoking. In a circular dated August 2, 2012, the ministry has made it mandatory for films that have smoking scenes to shoot a 20 second disclaimer. This disclaimer is to be shot with the actor who is shown to be smoking in the movie. It has to be repeated when the movie re-starts after the interval, like the current disclaimer is. Over and above that a message saying “cigarette smoking is injurious to health” has to be flashed during the entire duration of a smoking scene. (You can read the complete report here).
The move is in line with the government policy to discourage smoking. In line with this policy, every packet of cigarette now carries gruesome pictures showing the negative effects of smoking. These graphic images show various ways in which people are affected by smoking. These could be lung tumours, gangrenous feet and toes, throat cancers and so on.
On the face of it these moves seem to make sense given that one third of adult males around the world smoke. Nicotine addiction is one of the biggest killers of human beings around the world.
But the question that crops up here is that do these warnings really work?
First and foremost the disclaimers in place or those that are being put in place work with the assumption that people who smoke “cigarettes” do not understand the risk of smoking. Is that true?
In his bestselling book The Tipping Point Malcolm Gladwell talks about a study carried out by Harvard University which asked smokers to guess how many years of their life smoking would take, if they started smoking at the age of 21. The average response of the smokers was nine years, higher than the actual six or seven years that it would cost them. So the notion that smokers smoke because they do not understand the risks of smoking is at best juvenile.
But what about a country like India where half the population is functionally illiterate? Do those who smoke cigarettes understand the risk of smoking them?
If we look at the definition of poverty in this country, those spending less than or equal to Rs 28.65 per day in cities or Rs 22.42 in rural areas, are deemed to be poor. Now these are not the people who would be smoking cigarettes which can cost anywhere from Rs 2-5 per stick. They simply cannot afford it. They smoke bidis.
So chances are the average Indian who smokes cigarettes earns reasonably well and is educated enough to understand the risks of smoking. But he still smokes.
If the government really wants to discourage smoking and reduce the ill effects of tobacco consumption in this country, they should be concentrating on bidis, gutkas and pan masalas rather than cigarettes.
That’s one part of the argument. People who smoke understand its risk and continue to smoke. The other part that needs to be discussed is that do pictorial warnings and disclaimers of various kinds work? Do they discourage people from smoking?
A recent research seems to suggest the opposite i.e. the warnings seem to encourage people to smoke more. Brand Guru Martin Lindstrom carried out a functional magnetic resonance imaging tests on the brains of smokers a few years back. He showed them what he felt was one of the most effective anti-smoking ads he had ever seen.
“A group of people are sitting around and chatting and smoking. They’re having a jolly good time, except for one problem: instead of smoke, thick, greenish-yellow globules of fat are pouring out of the tips of their cigarettes, congealing, coalescing and splattering onto their ashtrays. The more the smokers talk and gesture, the more those caterpillar-sized wads of fats end up on the table, the floor, their shirtsleeves, all over the place. The point being, of course, that smoking spreads these same globules of fat throughout your bloodstream, clogging up your arteries and wreaking havoc with your health,” writes Lindstrom in his book Buyology – How Everything We Believe About Why We Buy is Wrong.
When this advertisement was shown to smokers who took part in this experiment they weren’t put off by the gruesome images of fat. As Lindstrom writes “They weren’t put off by the gruesome images of artery-clogging fart; they barely even noticed them.”
But what the message did instead was that it activated the “craving spot” in the brain. “Cigarette warnings…stimulated an area of the smokers’ brains called the nucleus accumbens, otherwise known as “the craving spot.”. The region is a chain-link of specialized neurons that lights up when the body desires something – whether it’s alcohol, drugs, tobacco, sex, or gambling. When stimulated, the nucleus accumbens requires higher and higher doses to get its fix,” points out Lindstrom. So the gruesome advertisement made people want to smoke more instead of less. This was an unintended consequence.
“Camel smokers experienced more cravings when they saw illustrations of Camels and Camel logos, and Marlboro smokers experienced more cravings when they saw illustrations of the iconic Marlboro Man,” writes Lindstrom in his new book Brandwashed – Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy.
Another move that has been resorted to is the blurring out of smoking images when the trailers and songs of new movies are played on television. The song Chikni Chameli from Agneepath has some side dancers smoking bidis. This visual has been blurred out on television. In the trailers of Gangs of Wasseypur II the chillum being smoked by Faizal Khan has been blurred out. What is the point of doing this? I guess the only people who do not understand that the character is smoking a bidi or a chillum are the babus at the ministry of information and broadcasting. In fact the blurring may even attract adolescents and children and they might try to figure out what exactly is being blurred. Ironically scenes in older movies where characters are shown drinking and smoking continue to be broadcast as it is.
Also this does bring us back to the fundamental point whether cinema is a reflection of the world that we live in? The world that we live in allows smoking. It is not an illegal activity. But rape is illegal. And movies are allowed to show rape scenes. Actor Shakti Kapoor made a career out of raping film heroines on screen. So if rape scenes are allowed on screen what is the problem with smoking?
(The article originally appeared on www.firstpost.com on August 11,2012. http://www.firstpost.com/living/why-warnings-against-smoking-could-be-injurious-to-health-414602.html/2)
(Vivek Kaul is a writer who can be reached at [email protected] He does not smoke)

Why the gutka ban in Maharashtra won’t work


Vivek Kaul

One of the things about having grown up in erstwhile Bihar was that I ended up with the habit of having paan now and then. For brief periods of time it would turn into an addiction and I needed my paan right after lunch.
Nearly 10 years back, while working in Hyderabad my paan-eating habit was at its peak. I went out for my afternoon paan right after a heavy lunch. On one such occasion, while I was waiting for the paanwallah to make my daily fix, someone came and stood next to me. In chaste Hyderabadi Hindi he asked the paanwallah“kya miyan unne rakhe kya?
The paanwallah, who till then was sitting cross-legged, quietly got down and suddenly put his hand next to his crotch. For a moment I was too shocked at the scene that was playing out in front of me. The paanwallah then quietly handed over something wrapped in polythene and was handed over a Rs 10 note in exchange.
Once the exchange was over I asked the paanwallahkya diya usko?
Gutka!” the paanwallah replied.
In March 2002, the state of Andhra Pradesh had banned the sale of gutka. But such was the addiction of the people that gutka never really stopped selling in the state, and the system simply went underground. You could buy gutka packets at almost any paan shop in Hyderabad.
The only thing that had changed was that the price had more than doubled. Everybody made more money in the process. The police turned a blind eye to this menace because they had bigger criminals to catch. And at the end of the day how many paanwallahs could they have put in jail? Also, while I have no concrete proof for this, I am sure that the local hawaldars must have been kept happy by passing them a share of the increased profits. The gutka manufactures pleaded ignorance by saying that the packets were being smuggled into Hyderabad and Andhra Pradesh from the other neighbouring states where the sales weren’t banned.
So everybody made more money in the process. The gutka consumer lost out because he had to pay a higher price for his addiction, but then he really didn’t mind. The government lost out on the taxes that would have come from official gutka sales.
The government’s reasoning in banning the sale of gutka was simple. The decision was made in the interest of public health. The loss in tax revenue for the government was thus secondary. Using similar logic the government of Maharashtra recently banned the sale of gutka in the state. While at face-level this might seem like the “right” thing to do, it doesn’t really work.
Gutka is also banned in Kerala, Madhya Pradesh, Bihar and Uttar Pradesh. Maharasthra has also banned pan masala, becoming the first state in India to do so.
Bans to stop people from consuming products that are injurious to their health have never really worked in this country. Manufacture, sale or consumption of alcohol has been banned in Gujarat since 1960. But as anyone who has lived in Gujarat long enough will tell you, sourcing any kind of alcoholic drink isn’t a problem. You just need to know the right person who can home-deliver it.
The charismatic NT Rama Rao implemented prohibition in 1994 after an anti-liquor movement spearheaded by women grew across the state. The men never really stopped drinking. Liquor continued to be available and was simply smuggled into the state from the neighbouring states.
N Chandrababu Naidu, son-in-law of NTR, became the Chief Minister in 1997. He revoked prohibition on the pretext that it was “not successful or feasible because of the leakages within the state and from across the borders”.
Haryana implemented prohibition in mid-1996 and lost out on Rs 1,200 crore of tax revenue during the period. The drinkers simply moved to drinking in neighbouring Delhi and Punjab during the period.
When states ban consumption of alcohol, or gutka for that matter, they are following what the Directive Principles of State Policy envisaged when the constitution of India was made. Article 47 of the Directive Principles of State Policy states, “The state shall endeavour to bring about prohibition of the use, except for medicinal purposes, of intoxicating drinks and of drugs which are injurious to health.”
But such bans have never really worked. The government doesn’t have the administrative machinery required to implement such bans. Also, leakages from neighbouring states ensures that the supply of the banned good never really stops, be it gutka, pan masala or alcohol for that matter. In fact, with more profits to be made the risk of smuggling becomes increasingly lucrative.
Given these reasons, the ban on gutka and pan masala in Maharashtra will have no real impact accept moving their sales underground. The consumer addicted to it will readily pay more for the product. The government will lose out on the tax revenue.
The only way to ensure that the ban works is to have a nationwide ban and systematically ensure that no gutka-pan masala is produced or sold in this country. But that again is easier said than done. A lot of state governments may not be ready to lose out on the revenue that the sales of these products brings in. Moreover, what is to stop its smuggling from Nepal or Bangladesh? It also raises the question: why stop at banning gutka-pan masala and alcohol. What about banning cigarettes and bidis as well?
(The article originally appeared on www.firstpost.com on July 13,2012. http://www.firstpost.com/india/why-the-gutka-ban-in-maharashtra-wont-work-376475.html)
Vivek Kaul is a writer and can be reached at [email protected]