Wednesday, 23 May 2012

Why Petrol & not Alcohol, Tobacco Products?

Is increasing petrol prices repeatedly the only option left with Government of India? That too when petrol is the most essential commodity for the common man, who cant even think of earning his livelihood without it. Cant there be other better options which would not over-burden the common man in fulfilling his daily needs for survival and at the same time, reduce the risk to his life and reduce his expense on medical treatments in a country without most basic medical facilities for the common man?

Unfortunately we live in such a country where it takes death of almost 1000 children in GB Pant hospital, Srinagar for Union Health Minister Ghulam Nabi Azad (resident of J&K state) to wake up from his sleep and visit the state and from years together, the projects of first ever Super-specialty hospitals of J&K state are hanging in complete uncertainty.

Present Liquor Consumption in India- 6.7 billion litres. If the government charges Rs.20 extra year on year, extra annual revenue for present year will be Rs.134 billion (Rs.13,400 Cr).

Alcohol consumption is increasing in India at a whooping rate of 30% year on year. Projected consumption for the year 2015 is - 19 billion litres. By then government would be charging Rs.60 extra per litre above present taxes and thus the extra revenue collected will be Rs.1,140 billion (Rs.1,14,000 Cr).

At present, there are 180 million (18 Crores) tobacco consumers in India and tobacco consumption will account for 13% deaths in India. 1,11,487 million cigarettes were consumed in India in the year 2010- 11.

If the government charges just Re.1 extra per stick, extra annual revenue collected will be- Rs.11,148 Cr and cigarettes account for only 20% of the tobacco consumed in India. Even if 50 paise are charged per unit of other forms of tobacco, government will be able to collect Rs.22,296 Cr more on other tobacco products. Total extra revenue from all tobacco products put together can be Rs.33,444Cr.

Consumption of cigarettes and other tobacco products is increasing in India at the rate of 4% annually. So by the year 2015, government will be earning an extra revenue of Rs.1,50,433 Cr from all tobacco products if the government keeps charging Re.1 extra every year on each cigarette and 50 paise per unit of other tobacco products.

By charging the above mentioned extra amounts on harmful products, that are not a necessity and are cause of deaths, heavy health expenses, the government can collect an extra amount of Rs.2,64,433 Cr per year by 2015.

Similarly, taxes on luxury (not a necessity for survival) and still harmful products like fast foods, soft 'pesticide' drinks, etc must be increased.

Above all, according to conservative estimates, corrupt officials in India are cornering around Rs.1,00,000 Cr every year and corruption is increasing at a rate of over 100% every year. So if the government shows some sincerity and tries to reduce corruption by just 20%, it will be an extra saving of more than Rs.1,20,000 Cr in next 3 years. 

Since I am not a economist and my calculations are a layman's estimates, government has better people and can take care of other repercussions of such decisions like effect on growth, employment in these sectors, etc and work out something thats a win win situation for every Indian. But its not rocket science and needs just a pinch of sincerity while drafting policies and planning.

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