Lower beedi taxes are short-term gain but long-term pain

If increasing cigarette taxes is a public health measure to discourage smoking, then lowering beedi taxes to ‘protect’ rural workers ignores the long-term cost to their lives. While most tobacco products are taxed at the highest Goods and Services Tax (GST) slab of 40%, beedis are taxed at just 18%, making them significantly cheaper than cigarettes and other forms of tobacco. The latest tax rates became effective this month.

Several government reports affirm that beedis are no less lethal than cigarettes. In fact, studies quoted in reports suggest that cancer incidence is often higher among beedi smokers. Given that cancer treatment costs three times more than other ailments — even in public hospitals — capping beedi taxes is a short-sighted subsidy.

A critical distinction between beedi and cigarette consumption lies in demographics. Data suggest that there is a substantial overlap between the labour force that rolls beedis and the primary consumer base. While cigarette smokers lack a defining demographic profile, beedi consumption is confined to a much more specific socio-economic segment.

Data from the National Family Health Survey show that beedi smoking is most pronounced among older rural men from the poorest 20% of the population. So, keeping beedi taxes low may enable workers to save a few coins in their youth, only for those savings to be eroded by the exorbitant cost of healthcare in later years.

Tobacco use in India is overwhelmingly concentrated among men. As of 2019-21, about 13.3% of men smoked cigarettes, while 7.8% smoked beedis. Among women, smoking rates were around 0.1% or lower. Beedi smoking was almost twice as prevalent in rural areas (8.3%) compared to urban areas (4.5%) among men.

While beedi smokers represent a relatively smaller share of the population than cigarette smokers, their frequency of consumption is significantly higher. Data reveal a stark divide: over 80% of beedi smokers consumed more than five sticks daily, whereas over 70% of cigarette smokers consumed fewer than five. So, an important distinction is that beedi policy should not just look at the number of people smoking; it needs to look at how much they are actually smoking.

The divide is more pronounced across education and age. While cigarette smoking is distributed relatively evenly across all schooling levels, beedi use is heavily concentrated among those with the lowest education levels. While younger and middle-aged men largely prefer cigarettes, beedi consumption is disproportionately prevalent among the older population.

Also, while there is almost no caste-based difference in cigarette smoking, beedi use shows a slight shift. Over 15% of the Scheduled Caste (SC) and Scheduled Tribe (ST) populations smoke cigarettes, which is similar to the share among the general category. With beedis, however, the numbers tilt slightly: 10.6% of the SC population smokes them, compared to 7% in the general category.

The economic disparity in tobacco choice is stark: while wealth has little impact on cigarette consumption, it is the primary driver of beedi use. Among India’s poorest households, the share of beedi and cigarette smokers is nearly identical (around 14-15%). However, as household wealth increases, beedi consumption plummets. In the richest households, while cigarette use remains steady at 11.5%, beedi consumption drops to just 2.1%.

The 2022 Report on Tobacco Control in India indicates that beedi smoking poses serious health risks, in many cases exceeding those of cigarettes. The report highlights striking differences in respiratory risk: beedi smokers are 2.87 times more likely to suffer from asthma, compared to 1.82 times for cigarette smokers.

Cancer risks show a similar pattern. A Mumbai cohort study found that beedi smokers faced a higher risk of all cancers than cigarette smokers, with particularly elevated risks for lung and laryngeal cancers. Tuberculosis mortality is also more severe, with beedi smokers facing 2.6 times the risk of death. “Poor people who are the main consumers of beedis end up spending more on health care,” said health economist Rijo John. “That is only going to increase the existing inequality between the poor and the rich.”

The Global Adult Tobacco Survey 2016-17 (GATS-2) shows that the average monthly expenditure of Indians on tobacco rose for both cigarette and beedi users, but for very different reasons. Daily smokers spent about ₹1,192 per month on cigarettes, up from ₹668 in 2009-10 (GATS-1), and spent ₹284 per month on beedis, up from ₹156, after adjusting for inflation.

For cigarettes, this increase was largely price-driven, the survey argued. The number of cigarettes smoked per day did not rise significantly between GATS-1 and GATS-2, indicating that higher spending reflects higher taxes and prices, rather than higher consumption. On the other hand, the number of bidis smoked per day increased significantly between the two surveys, driving up overall expenditure. This suggests that tax policy has been effective in containing cigarette consumption, but not beedi use.

John said specific excise is considered a better form of taxation in regulating consumption. “If the tax is levied solely on the basis of the quantity consumed, we pay the same tax whether the beedi is sold at a lower price or at a higher price by the manufacturer. This directly discourages consumption,” he said.

The data for the charts were sourced from the National Family Health Survey-5, Global Adult Tobacco Survey Second Round India (2016-17) and the Report on Tobacco Control in India (2022)

Note: Cancer risk estimates are based on Pednekar (2011, Mumbai) and Jayalekshmi (2008, Kerala), as cited in the Report on Tobacco Control in India 2022.

Published – February 19, 2026 07:00 am IST