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Tax hike rumours lead to hoarding of cigarettes

Abhishek Anand, New Delhi, July 9, 2014, DHNS: 3:13 IST
A day before the Union Budget, speculation about a massive hike in taxes on tobacco products and consequent increase in price led to hoarding of cigarettes in Delhi. AP file photo. For representation purpose
A day before the Union Budget, speculation about a massive hike in taxes on tobacco products and consequent increase in price led to hoarding of cigarettes in Delhi.

The black marketing resulted in a 35 per cent hike in prices of cigarettes. A packet that costs Rs 180 was being sold at Rs 210 in many areas of the city. Moreover, several cigarette brands were not available in stores as a result of massive hoarding.

At Connaught Place, brands like Gold Flake, Marlboro and others were being sold at Rs 30 higher than their original prices. Other costlier brands, such as Benson and Hedges, various brands of Wills Classic (Milds, Ultra Milds and Regular) were not available in many stores. At some places, per piece cost of these cigarettes rose from Rs 10 to Rs 12.

The hoarders seem to be waiting for the Centre to table the Budget in Parliament. Retail shopkeepers, however, blame the wholesale dealers for the rising prices and illegal hoarding of cigarettes. “We are not getting enough supply from wholesalers.

We are buying cigarettes at higher rates. There is a severe crunch in supply and we suspect that wholesalers have started hoarding cigarettes,” said Ram Kripal, a cigarette vendor at Connaught Place.

Last week, Union Health Minister Harsh Vardhan had batted for a hike in taxes on tobacco products to curtail consumption. However, traders fear that increased taxes on cigarettes will have a devastating impact on the industry.

“Unlike western countries, India has very low taxes on cigarettes. The rise in taxes must be proportional to the per capita income. If India starts selling cigarettes at UK rates, there will hardly be any buyers for costlier cigarettes,” said Awadhesh Tyagi, a wholesale dealer of cigarettes at Sadar Bazaar area.

The traders’ association condemned the hoarding and urged the government to conduct social awareness programmes to curtail consumption of tobacco products.

“There is no doubt that smoking is injurious. But hoarding of cigarettes will lead to increased demand and ultimately result in more consumption. The government should instead launch a special awareness programme to curtail its consumption,” Praveen Khandelwal, president of Confederation of All India Traders said.

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