Projected impact of bidi tax reform on health and economic outcomes in India: a modelling study

BACKGROUND: Bidis are the most commonly used smoked tobacco product in India. Despite their significant health burden, bidi taxation remains low and there are tax exemptions for small producers. METHODS: We used a multistate life table model to project the 50-year impact of bidi tax reform under two scenarios: 10% and 30% tax-induced price increases combined with removal of small-producer exemptions. Outcomes included years of life gained (YLG), changes in direct health expenditures, indirect morbidity costs, economic output from averted premature mortality, consumer spending and tax revenues. Total economic effects were defined as reductions in direct health expenditures and indirect morbidity costs plus gains in economic output. Long-run monetary outcomes were discounted at 3%. RESULTS: A 10% price increase yields 21.78 million YLG (95% uncertainty interval (UI) 13.25 to 32.42 million) and Indian rupees (INR) 560.1 billion (0.25% of total health expenditure (THE)) in discounted health savings over 50 years; a 30% increase yields 47.95 million YLG (95% UI 29.17 to 71.37 million) and INR 1232.3 billion (0.54% of THE). Total economic effects reach INR 2530.8 billion (1.12% of THE) and INR 5557.7 billion (2.45% of THE) under the 10% and 30% scenarios, respectively. Discounted tax revenues increase by INR 519.9 billion and INR 1390.0 billion. Absolute gains are largest in Uttar Pradesh and West Bengal, while Uttarakhand, Haryana and Tripura show the highest per capita and proportional benefits. CONCLUSION: Strengthening bidi taxation and removing exemptions would substantially reduce smoking, improve health and generate significant long-term economic and fiscal gains.