The Funding Gap in India's Fight Against Tobacco

India earns over Rs 73,000 crore annually from tobacco taxes, yet dedicated spending on tobacco control remains a fraction of that.

On World No Tobacco Day, observed on May 31, governments worldwide renew their commitment to combating tobacco use. This year’s WHO theme, “Unmasking the Appeal — Countering Nicotine and Tobacco Addiction", highlights industry tactics that attract young users.

In India, this occasion also offers an opportunity to reflect on the complex balance between tobacco tax revenues and investments in tobacco control.

Every year on May 31, the global community focuses on reducing tobacco-related harm. While the tobacco industry’s marketing strategies deserve scrutiny, India faces its own policy challenge: substantial revenue from tobacco products alongside the need for stronger prevention and cessation efforts.

According to official figures, taxes from tobacco products (including GST, excise duty, cess and other levies) contributed around 2.2 per cent of India’s gross tax revenue in 2023-24. In recent years, annual collections have hovered near or above Rs 73,000-76,000 crore.

This revenue supports various public programmes, yet it also underscores a longstanding policy paradox. The National Tobacco Control Programme (NTCP), the Centre’s flagship initiative for tobacco cessation and enforcement, receives relatively modest funding. Analyses, including from the National Institute of Public Finance and Policy (NIPFP), indicate annual allocations often remain below Rs 50 crore — a small fraction of the revenue generated. While taxation itself serves as a tool to discourage consumption by raising prices, the gap in dedicated spending on enforcement, awareness and cessation services merits attention.

Grassroots Enforcement

While the national picture shows a funding gap, the challenges of grassroots enforcement become evident through recent state-level decisions, such as those in Maharashtra.

A recent example illustrates this challenge. On May 22, 2026, Maharashtra’s Public Health Department issued a government resolution providing Rs 2,000 per taluka annually to taluka-level coordination and monitoring committees. Formed in 2023 under the Cigarettes and Other Tobacco Products Act (COTPA), these committees aim to strengthen enforcement at the local level.

Maharashtra has approximately 358 talukas. The total allocation for these committees thus comes to around Rs 7.16 lakh per year. While the intent behind creating taluka-level bodies is commendable — bringing enforcement closer to villages and towns — the modest financial support highlights the resource constraints faced by such initiatives. The committees are expected to handle awareness, monitoring and enforcement tasks, often by integrating with existing meetings of the Taluka De-addiction Committee under the Social Justice Department.

Broader Picture

This situation is not unique to Maharashtra. Nationally, data from 2015-16 to 2022-23 shows that only about 38 per cent of approved NTCP funds were utilised. Factors include limited staffing, training gaps and infrastructure challenges at district and sub-district levels.

Maharashtra has achieved notable success in reducing cigarette consumption and ranks high on certain tobacco-control indicators, yet utilisation of NTCP funds has historically been modest.

According to the Global Adult Tobacco Survey (GATS-2, 2016-17), around 267 million adults (28.6 per cent prevalence) use tobacco in some form. Although prevalence has declined since the previous survey, the absolute numbers remain significant, calling for sustained, well-resourced efforts.

The World Health Organization recommends that taxes should constitute at least 75 per cent of the retail price of tobacco products. In India, the tax incidence on cigarettes is approximately 53 per cent, as noted by Finance Minister Nirmala Sitharaman in Parliament.

Recent policy changes, including the Central Excise (Amendment) Bill, 2025, aim to maintain revenue stability while adjusting duties. Public health experts have long suggested exploring earmarking a portion of tobacco taxes specifically for control programmes, cessation centres and school-based awareness drives.

Way Forward

On World No Tobacco Day 2026, India will reiterate its commitment to a tobacco-free future. Symbolic observances are important, but lasting progress depends on strengthening implementation machinery.

Enhancing utilisation of available funds, building capacity at the taluka and district levels, and ensuring better coordination between health and revenue departments could help bridge existing gaps. The Rs 2,000 per taluka allocation, while limited, represents a step towards decentralised action. With additional support through training, monitoring mechanisms and integration with broader non-communicable disease programmes, these committees could become more effective. Many states, including Maharashtra, have demonstrated that focused efforts can yield results in reducing consumption.

Tobacco control involves multiple dimensions: taxation, enforcement, awareness and support for cessation. Aligning fiscal policy more closely with public health goals remains an ongoing policy challenge. A balanced approach that sustains revenue while progressively investing in prevention and de-addiction could better serve both economic and health objectives.

(The writer is a senior journalist. Views personal.)