Govt of India is the Biggest Tobacco Offender – and the Biggest Investor in ITC

Source from:  Firstpost.com (in)  08/01/2014

Consider this for irony. The government taxes cigarettes heavily. But it is government that is most invested in ITC, India's largest cigarette maker. Government is taxing its own biggest investment, but benefits from both.

Consider another: Smoking causes cancer - and kills. But it is Life Insurance Corporation, which should have a vested interest in people living long, that is most invested in ITC. LIC invests in a company whose products kill, and then pays out the sums insured.

On Wednesday (30 July),  the public sector LIC increased its stake in ITC to 14.42 percent by buying 4.39 crore shares in the three months ended June.

Between LIC, the public sector general insurance companies, and the Specified Undertaking of the Unit Trust of India (SUUTI), the government is the largest single shareholder in ITC - accounting for a 32.51 percent stake, despite protests from several health activists.

For a government that spends crores on public health, including the treatment of cancer patients, should it hold on to such a big stake in a conglomerate whose chief source of revenue is a tobacco-related product? Of course, ITC is more than a cigarette company, and now draws a huge chunk of its revenues from FMCG products like packed foods and toiletries.

Public health specialists campaigning against tobacco  have time and again termed the government investment in ITC as unethical because it was against the principle that governments should not invest in tobacco, enshrined in an international convention to which India is a signatory.

And with  government spending so much to tackle tobacco usage over the past few years, one would expect a phasing out of the LIC shares from ITC. However, the number of shares have only  increased in the past few years. Enditem