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Smoking ban leaves Kerala treasury gasping

George Iype in Cochin

The ban on smoking in public places in Kerala, imposed through judicial intervention, has hit the state government's revenue collection and threatened to displace a sizeable section of the more than 200,000 beedi and cigar workers across the state.

But similar public interest petitions being filed by anti-smoking activists in Karnataka, Tamil Nadu, Andhra Pradesh and Maharashtra are all set to adversely affect the huge excise revenues that the central government earns from the tobacco industry.

Ever since the Kerala high court passed an order on July 12 strictly prohibiting smoking in public places, the state police have arrested and fined nearly 3,000 people across the state who were found smoking at bus stands and railway stations, on roads, in offices, hotels and bars.

The court order came after a woman employee filed a public interest petition stating that she found it difficult to commute in a bus in which her male co-passengers smoked.

Enthused by the court order, anti-smoking activists have launched a statewide campaign to ensure that the police crackdown on smokers does not slow down.

But officials in the state industry ministry say the strict implementation of the order has had an immediate effect on the state government's revenue collection.

"After three weeks of the judicial crackdown on smokers, the tobacco industry in Kerala has reported a 30 per cent drop in the sale of cigarettes, beedis and similar products," a senior industry ministry official told rediff.com

He said that though the state government is strictly observing the court order as it concerns public health, the loss in revenue has forced the ruling Left Democratic Front government to look up to the Centre's intervention in the matter.

Kerala earns more than Rs 2 billion annually as excise duty from the tobacco industry.

The prohibition on smoking in public places has also hit more than 200,000 beedi and cigar workers who will hold massive protest marches and dharnas (sit-in protests) in front of various courts across the state on August 6.

According to the Kerala Beedi and Cigar Workers Federation, the strict implementation of the ban is threatening to drive thousands of employees and their families to poverty.

KBCWF president P Vijayan said that already the largest beedi manufacturing co-operative unit, Kerala Dinesh Beedi, has recorded a sharp decline in sales following the ban and any further drop will paralyse the tobacco industry.

KDB, which has an annual sales turnover of nearly Rs 800 million, employs more than 50,000 people.

But officials said the Centre is unlikely to keep quiet as similar petitions are being filed in Karnataka, Tamil Nadu, Andhra Pradesh and Maharashtra by anti-smoking activists, and a repeat of the Kerala example across the country would make a huge dent in its coffers.

The tobacco industry accounts for almost 10 per cent of the total annual excise revenue of the Union government, the largest single chunk. In 1998-99, the Centre's revenue collection from the industry was a whopping Rs 65.37 billion.

India, which produces nearly 120 million kilos of tobacco every year, is the world's third largest producer of tobacco products.

Since both the Centre and most states are facing insolvency following high fiscal deficits, tobacco majors in the country like ITC and the Golden Tobacco Company expect the Centre to intervene if courts prohibit smoking in public places in other states too.

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