Tobacco activism gets more muscle: MP & MLA question MoF on investments in tobacco

The Minister of State in the Ministry of Finance in reply to the questions raised said “Life Insurance Corporation of India (LIC) is holding equity shares of ITC Ltd which has diversified presence in various businesses. The Corporation’s investments are carried out within the norms, rules and regulations issued by the Insurance Regulatory and Development Authority of India (IRDAI) from time to time in order to maximise return to the policyholders and minimise risk keeping within the limits prescribed by IRDAI. The investments are done through the secondary market considering the performance and prospects of the individual company and the sector as a whole, with the objective of earning good returns for its policyholders. Government is aware of the health hazards attributable to tobacco usage. The Cigarettes and Other Tobacco Products (Packaging and Labelling) Amendment Rules, 2014, and further notification dated 24 th September, 2015 mandates specified health warnings covering 85% of the principal display area of the packages of tobacco products. Tobacco consumption is a major risk factor for some of the Non Communicable Diseases (NCDs) such as cancers, cardiovascular diseases, chronic respiratory diseases etc.”

Recently a PIL was filed in the High Court of Mumbai by public spirited persons spearheaded by Mrs. Sumitra Hooda Pednekar (wife of Maharashtra’s former home and labour minister, Mr. Satish Pednekar, who died of oral cancer in 2011), Mr. Ashish Deshmukh, Member of Legislative Assembly, Maharashtra including R Venkataramanan, managing trustee of Tata Trusts (In his individual capacity), Dr. Pankaj Chaturvedi, Professor Surgeon, Tata Memorial Hospital and few others recognising and fearing the menace of tobacco and its effect on the people of this country & Appreciating the questions raised by MP Shri Chandrakant Khaire, one of the petitioner of PIL, Dr. Ashish Deshmukh, Member of Legislative Assembly, Maharashtra said “I am happy that the voice of anti-tobacco citizenry has reached where it matters the most. MP Shri Chandrakant Khaire, has raised the issue of the duality in policy adopted by the government in relation to tobacco and tobacco related products. I am anticipating that the Government will take a logically appropriate action in this case”

Perplexed by the substantial investments made in the tobacco industry by wholly- owned public sector undertakings and worried about the act of the wholly owned public sector undertakings investing in tobacco companies in contradiction to the anti-tobacco stance taken by the Government of India on a national as well as an international level the PIL had been heard by the High Court. The petition made IRDA (The insurance regulator) and Union of India (through Ministry of Health and Family Welfare) a respondent to the PIL. The PIL is seeking directions against the state-owned insurance companies to divest their shareholding from the tobacco companies and not make such investments in the future. In addition, it also seeks that the Government, as well as the Insurance Regulatory and Development Authority, be directed to frame guidelines/code of conduct to ensure that such disinvestment takes place and such investments are prevented in the future.

According to the petition filed, in India, there are 27.5 crore tobacco users i.e. every third Indian adult uses some form of tobacco. Tobacco kills every third tobacco user prematurely through cancer, heart attack, lung diseases, stroke etc. A smoker loses 8 years of his life due to this addiction. Tobacco is responsible for nearly 50% cancers in India and 90% of mouth cancer patients die within 12 months of diagnosis. As per WHO, tobacco addiction is a disease. Therefore, every third adult Indian is suffering from a serious disease. About 10 lac Indians die from tobacco-related diseases each year in India. Tobacco smoke contains more than 7000 harmful chemicals/toxins and 69 carcinogens including nicotine, tar and other radioactive components. It is estimated that approximately 1 billion people will be killed in this century because of tobacco.

However, the Insurance Companies, along with SUUTI (Specified Undertaking of Unit Trust of India) as on date holds a 32% stake in ITC Ltd which is primarily a tobacco company. The 383 crore shares that are held by Respondents no. 1 to 5 of the petition and SUUTI account for a majority of stake in ITC and translates into a humongous amount.

Considering the price at which the stock is currently trading at Rs. 280 per share, the total value of the stake held by these insurance companies and SUUTI in ITC comes to a staggering Rs 1, 07,000 crore. Out of this figure a huge sum of Rs. 76,505 crore is the amount invested by the public sector insurance companies. The recent numbers also show ITC as India’s largest company by market cap in the FMCG Sector and have been one of the topmost wealth creating companies in the recent past. However, the FMCG part of ITC has not yielded many results and it continues to thrive on cigarettes.