May 04, 2014
The Question: What is the economic contribution of the bidi industry on the Indian economy?
What We Found: To estimate the economic contribution of the bidi industry in India, we used a survey of unorganized bidi manufacturing firms that is nationally representative, with n=2841. We found that the average annual economic output per bidi worker in India is around US$143—an order of magnitude smaller than the losses from bidi output, from the hundreds of thousands of annual deaths due to smoking in India each year.
Why It Matters: About 1 million Indians each year die of causes related to tobacco smoking. India is the second-largest tobacco consumer in the world, with 120 million smokers ages 15 or older. Bidi is the most popular smoking tobacco product in India and imposes significant risks not only for smokers but also for workers who manufacture bidi. It remains a largely untaxed and unregulated substance, and many arguments against taxing bidi invoke the potential cost of losing economic contributions. The only effective way to respond to this argument and see if taxing bidi would be economically viable is to find that cost, which we do in this paper.
