An analysis of affordability of cigarettes and bidis in India

Easy affordability of tobacco products is one of the reasons for increased tobacco consumption. The study attempts to project the affordability of cigarettes and bidis from 2017 to 2025 in India.

The affordability was measured in terms of Relative Income Price (RIP) and the price of smoked tobacco products. RIP depends upon per capita gross domestic production (GDP) required to purchase 100 packets of cigarettes. The GDP per capita was calculated using data from National Accounts Division, Central Statistics Office, 2017. The price of cigarettes and bidis was calculated using data from WHO global report on tobacco epidemics, 2017. The projections were done from 2017 to 2025 assuming constant rise of per capita GDP as in the year 2017 (7%) and price rise of cigarette and bidis due to inflation (4%). Four and Six scenarios for cigarettes and bidis respectively, of different tax rises (0%-200%) in the years 2017-2025 were taken.

Bidis were more affordable at lower increments in tax as compared to cigarettes. Affordability for cigarettes decreased to - 9.9% after a 100% increase in tax whereas affordability of bidi decreased to - 8.61% after a 200% increase in tax by the end of 2025.

Since bidis are more easily affordable than cigarettes, an adequate increase in taxes of bidi should be made to make it less affordable.