Budget 2017: Tobacco farmers disappointed by hike in excise on cigarettes

Govt had hiked excise duty on unmanufactured tobacco to 8.3% from 4.2%

The livelihood of tobacco farmers has been dealt a blow by the crackdown of the government on cigarettes and tobacco products, which increased tax on the items in the Budget while ignoring their plight, according to Federation of All India Farmer Associations (FAIFA).

FAIFA, a body representing farmers across states, including Andhra Pradesh, Telangana, Karnataka and Gujarat, said the increase in excise duty on cigarettes will lead to a further drop in earnings of domestic tobacco growers.

"The duty increase announced in the Budget is a blow to the livelihood of FCV (cigarette) tobacco farmers, who have been facing unprecedented hardships due to the sharp drop in demand for their produce," FAIFA General Secretary Murali Babu said in a statement.

The resulting loss in earnings of farmers and the acute financial distress faced by them has even led to unfortunate cases of suicides by farmers in the tobacco growing states of Andhra Pradesh, Telangana and Karnataka last year, he added.

The farmers' body said despite an appeal to the Finance Minister Arun Jaitley "to salvage tobacco farmers from the onslaught of heavy taxation on the legal cigarette industry in order to help bring stability in farm prices and farmer earnings", their request hasn't been heeded to.

"We are extremely concerned that the Union Budget 2017-18 has once again increased the excise duty on cigarettes. The increase in duty rates will lead to a further drop in farm earnings as illegal cigarettes will continue to increase and cause a further drop in the off-take of domestic tobaccos grown by Indian farmers," it added.

In the Budget, Jaitley had hiked excise duty on unmanufactured tobacco to 8.3% from 4.2% earlier, while that on pan masala to 9% from 6%.

Likewise, excise duty on the cigar, cheroots were increased to 12.5% or Rs 4,006 per thousand from 12.5% or Rs 3,755 per thousand earlier. Excise duty on chewing tobacco, including filter khaini and jarda scented tobacco was also doubled to 12% from 6% earlier.

Excise on paper-rolled handmade bidis was hiked to Rs 28 per thousand from Rs 21 per thousand and the same for paper rolled bidis to Rs 78 per thousand from Rs 21 per thousand earlier.

While appreciating the focus of Budget on agricultural growth, FAIFA, however, said, "the plight of tobacco farmers whose earnings have reduced sharply in the past recent years has been completely neglected and no relief whatsoever or export incentives have been provided which will increase offtake of our produce".

"FAIFA appeals to the government to take appropriate measures to protect the livelihood and earnings of farmers in the country so that unfortunate incidents of farmer suicides are not repeated in future," it said.