Beyond Necessities: A Closer Look at Per Capita Consumption Expenditure on Tobacco and Alcoholic Beverages during the last Decade

Over the last decade, rising household consumption expenditure on intoxicants, particularly on tobacco, tobacco products and alcoholic beverages, poses serious concerns for public health in India. The consumption of intoxicants is associated with negative externalities to society in terms of morbidity and mortality. It also undermines the national objective of poverty alleviation for individuals already at the lower end of the socio-economic strata. Understanding the prevalence of consumption of intoxicants across states, regions (rural versus urban), and fractile classes helps to identify high-risk groups and regions. Analysis of compositional changes in the consumption of intoxicants is crucial for identifying the effectiveness of existing taxation policies and regulations. We analyse the temporal and spatial variations in the consumption of intoxicants between 2011-12 and 2022-23. The study's findings indicate an increasing preference for alcoholic beverages, particularly among higher-fractile classes in both rural and urban areas. Likewise, there has been a growing preference for chewing tobacco and cigarettes among the low and middle fractile classes, particularly in rural areas. Higher taxes may make these products less affordable and discourage consumption, particularly among price-sensitive consumers. However, the effectiveness of the taxation policy also depends on the own-price, cross-price, and income elasticity of demand. Moreover, the availability of alternative supplies (other than those from formal sources) renders the taxation and regulation policies inefficient.