National Council of Applied Economic Research
Opinion: Asrar Alam.
Adopting legislative measures that raise the minimum age for consumption of tobacco products can help restrict adolescents and youth access to them.
India’s pan, tobacco, and intoxicants industry remains robust, even as the government enforces measures to curb consumption. Tobacco continues to be a significant public health risk, contributing to rising noncommunicable diseases (NCDs) and economic losses. According to the NSS Consumer Expenditure Survey (CES) 2023-24, consumption of pan, tobacco, and intoxicants persists across a large section of Indian households, with wide-ranging implications on household finances, education, and economic priorities.
The scale of tobacco use
India is home to 29 per cent of the world’s tobacco users, second only to China. Tobacco-related diseases account for around 1.35 million deaths annually, making it a leading cause of preventable deaths in the country. NCDs, including heart disease, cancer, and respiratory conditions, are closely linked to tobacco and intoxicants. Data from NSS CES 2023-24 reveals that 68.3 per cent of households across the country consume tobacco and other intoxicants in some form, with the prevalence notably higher in rural areas (74.9 per cent) compared to urban areas (53.8 per cent).
Economic costs
The economic impact of tobacco on households is profound. According to WHO estimates, in 2017-18, India lost over ₹1.7 lakh crore due to tobacco-related diseases, including healthcare costs and productivity losses from premature deaths — over three times the health allocation of the Union Budget in same period, highlighting the immense economic burden of tobacco consumption.
Beyond national-level economic losses, pan, tobacco, and intoxicants also imposes a significant financial burden on individual households. According to NSS CES 2023-24, households consuming these substances spend 4.8 per cent of their total expenditure on them — substantial when compared to the 3.6 per cent spent on education. In contrast, non-consuming households spend more on education, allocating 5.8 per cent of their total expenditure to this area.
Disparities in household expenditure
The NSS CES 2023-24 data further reveals disparities in how different income groups allocate their expenditure, particularly between households consuming pan, tobacco, and intoxicants and those that do not. When analysed by Monthly Per Capita Expenditure (MPCE) quintiles, the share of household spending on these substances remains relatively constant among their users across all income levels, ranging from4.6 per cent in Quintile 2 to 5.1 per cent in Quintile 4. This suggests that tobacco consumption is largely inelastic, meaning it is not significantly influenced by increases in household income.
However, the same cannot be said for spending on education. Among non-consuming households, education spending rises significantly as income increases, from2.8 per cent in Quintile 1 to 7.5 per cent in Quintile 5. This positive correlation between income and education investment demonstrates that non-tobacco-consuming households prioritise education as their financial capacity improves. In contrast, households consuming pan, tobacco, and intoxicants allocate less to education, even in higher-income quintiles, with spending on education peaking at 5.2 per cent in Quintile 5.
State-level data further highlights these disparities, especially in regions with high pan, tobacco, and intoxicants consumption. In north-eastern States with extremely high consumption rates, often over 90 per cent by households, the link between spending on these substances and education investment is particularly troubling. For instance, in Meghalaya (96.9 per cent), Arunachal Pradesh (93.9 per cent), and Mizoram (91.8 percent), households allocate 6.5 per cent to 8.1 per cent of their expenditure to pan, tobacco, or intoxicants, while spending on education remains very low, around 2 percent in Arunachal Pradesh and Mizoram. This imbalance diverts resources from education, worsening long-term socioeconomic challenges in these areas.
Even in States with lower prevalence of these substances, like Kerala (22.9 per cent) and Punjab (37.8 per cent), a similar pattern emerges. This disparity highlights how consumption of these substances diverts financial resources away from education, deepening long-term socioeconomic challenges.
New strategies needed
The Cigarettes and Other Tobacco Products Act (COTPA), along with other legislative measures, has established a framework to regulate the sale and consumption of tobacco in India. While these regulations have led to a decline in overall prevalence, usage remains widespread.
According to the Global Adult Tobacco Survey (GATS) 2, 96 per cent of adults are aware of the health risks associated with smokeless tobacco. Yet, 12.4 per cent of individuals aged 15 to 24 still consume tobacco. Furthermore, The Global Youth Tobacco Survey (GYTS) 2019 further highlights that 55 per cent of lifelong tobacco users begin the habit before turning 20.
To break the deeply ingrained tobacco habits prevention efforts must target non-users, especially adolescents and youth. Young people often imitate the behaviours of their elders, making it even more vital to target this age group. NSS CES 2023-24 data, approximately 168 million individuals aged15-24 live in households that consume these products. Early exposure to nicotine significantly increases the chances of continued use into adulthood, as young brains are particularly vulnerable to addiction.
Adopting legislative measures, such as the US2019 law that raised the minimum age for tobacco sales from 18 to 21, could help restrict adolescents and youth access to tobacco products. By implementing similar strategies, India can enhance its fight against tobacco use and safeguard the health of future generations.
The writer is an Associate Fellow, National Council of Applied Economic Research.