Tobacco industry set for a shakeout; insurance companies questioned on stake held
An effort made by some like-minded people could sweep the tobacco industry off its feet. A group of citizens have got together, questioning the contrarian policy of the government where on one hand crores of rupees are spent on anti-tobacco initiatives while on the other its own institutions patronise tobacco companies by heavily investing into them.
Filed by Mrs Smita Pednekar, wife of Maharashtra’s former Home and Labour Minister, Satish Pednekar, who died of oral cancer in 2011, the PIL filed in the High Court of Mumbai has also found support from many other individuals including top officials of the Tata Trust and Tata Memorial Hospital.
Filed against the union government, the Insurance Regulatory and Development Authority of India and five state-run life insurance companies including LIC and GIC is for investing in tobacco companies including ITC and VST Industries. These investments according to the PIL contradict the anti-tobacco stand of the government of India on a national and international level.
The total worth of the holdings by all these companies is worth more than a whopping ₹1 lakh crore based on recent prices of the stock. Four public sector insurance companies and the Specified Undertaking of the Unit Trust of India (SUUTI) hold 30.25% shares of ITC. And surprisingly among the largest to hold a stake is Life Insurance Corp of India at 16.29% of the shares. SUUTI’s holding is 9.10%.
What has also come to light is the swapping of shares from one hand to the other keeping the net holdings by these institutions intact. In February, SUUTI sold 2% of its stake in ITC to LIC for a reported ₹ 6,700 crore. Other companies named in the PIL include General Insurance Co, New India Assurance Co, Oriental Insurance Co and National Insurance Co. New India Assurance holds a 1.71% stake in VST Industries.
The petitioners believe that LIC, which has sold millions of Indians life cover, should not be a party to the business of ITC or any other tobacco firm. The petition on its logical conclusion could see a complete shakeout of the tobacco industry, which has been thriving despite all the anti-smoking and anti-tobacco initiatives in place.
According to published data there are 27.5 crore tobacco users in India which means every third Indian adult uses some form of tobacco. Tobacco kills every third tobacco user prematurely through cancer, heart attack, lung diseases, stroke etc. As per WHO, tobacco addiction is a disease. About 10 lac Indians die from tobacco-related diseases each year in India. It therefore comes as a surprise that even such alarming statistics are being thrown to the winds by government owned institutions themselves. The fight against tobacco finally seems to have got on to the right direction seeking the government to walk the talk on their policies on the anti-tobacco front.