Why govt should get rid of its stake in tobacco co ITC

Should the government take a moral stand and get rid of its stake in tobacco companies like ITC ?

Questions have been raised over why the government has kept ‘strategic’ stakes in some corporate entitities. The government is expected to soon dissolve the Specified Undertaking of the Unit Trust of India (SUUTI).

[caption id=“attachment_264317” align=“alignleft” width=“380” caption=“The Indian government may perhaps be the only one in the world with a stake in a tobacco company. Representational image. Reuters”]  [/caption]

The government reportedly now plans to establish a National Asset Management Co (NAMC) that would sell the government’s stake held through SUUTI in companies like ITC Ltd and use the proceeds for state-run companies.

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In 2010 around 5.5 lakh people died due to cancer, the highest number due to tobacco consumption. A debate on CNBC-Awaaz argues that for a government that spends crores on public health, also treating cancer patients, should it hold on to stake in a conglomerate whose chief source of revenue is a tobacco-related product?

Anil Singhvi, chairman of Ican Investment Advisors, said that the chief source of income for the conglomerate continues to be tobacco related products.

“If you say that ITC is in agriculture and running hotels it is merely eyewash, the major source of their income continues to be tobacco,” Singhvi said.

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Singhvi pointed out that the Indian government is perhaps one of the only governments in the world which has a strategic stake in a tobacco company and ironically even it’s insurance company Life Insurance Corporation (LIC), which provides life insurance policies, has a stake in the conglomerate.

Dr PC Gupta, of anti-tobacco advocacy group Healis also argued there can be no debate about recent statistics that show that a majority of cancer related deaths are connected to tobacco consumption.

YK Sapru, Cancer Patients Aid Association also said there is no rationale in the government holding stake in a cigarette manufacturing firm given that they spend a lot more on public health in treating patients through the public health system.

To view the complete debate click here.