BACKGROUND: Tobacco consumption poses a major public health challenge in India, with affordability and pricing significantly shaping usage patterns. This study analyzes trends in the affordability and pricing of tobacco products, including Bidi, Cigarette, Hookah, and Zarda, Kimam and Surti, from 2013-14 to 2022-23. It further examines the impact of the Goods and Services Tax (GST) by comparing tobacco price growth in the pre- and post-GST periods, offering insights for effective taxation and control policies.
METHODS: To understand the price dynamics and significance of GST for price variations, a log-linear regression and dummy variable model is applied respectively. The monthly Price indices data for all these tobacco products is available on the official platform of the Ministry of Statistics and Programme Implementation. For affordability, growth in per capita Gross Domestic Product and growth in prices of tobacco products is compared.
RESULTS: Pre-GST, the instantaneous growth rates of tobacco product prices were: Bidi at 0.66%/month, Cigarettes at 0.74%, Hooka at 0.61%, and Zarda, Kimam and Surti at 0.77% (95% CI), showing rapid increases. Post-GST, growth rates decelerated to 0.36%, 0.29%, 0.40%, and 0.21% (95% CI), respectively. This reflects a significant moderation in price escalation, particularly for Zarda, Kimam and Surti. Despite this, GST caused a structural break, pushing prices upward overall, except for Hooka. Economic accessibility of tobacco products increased substantially during 2020-21 and 2022-23, while the composite CPI rose faster post-GST, decoupling it from the slower tobacco price growth.
CONCLUSIONS: The implementation of GST initially raised tobacco product prices, but price growth slowed in the post-GST era, significantly increasing their affordability. This rise in affordability underscores the need for effective central tax and pricing policies. To address the negative externalities of tobacco consumption, the government must implement stronger measures to curb tobacco prevalence and protect public health.