LIC’s investment in ITC: Are we trying to cure small symptom by ignoring bigger disease?

Court’s acceptance of PIL filed by group of citizens against GoI and Govt. backed insurance companies has created the ripples much like when stone is thrown in the water. But this stone (Filing PIL) may be bigger than one thinks, resulting into bigger, far fetching and unsettling ripples in India.  The PIL filed in Bombay high court raises issue regarding significant investment into ITC company which has major source of profit from cigarettes which causes various types of cancers & eventually casualties in India. It makes a point that it looks unethical & against the law that GoI & its insurance companies are invested heavily in tobacco product company which leads to health issues in massive scale.

The turmoil I face: I confess honestly that the great amount of turmoil was created in my mind ever since I started reading about this. The biggest question in my mind is why the entire India (Media, activists, investors’ lobby, Companies, GoI etc.) is so narrowly focused on this single issue of govt. investment in tobacco product company.

I seek to address below two arguably more fundamental questions in the backdrop of above issue;

1. What is exactly an issue here? 

2. Are there no other larger dimensions we can think of deriving from this particular issue?

1.   What is exactly an issue here? :  Is government’s investment in tobacco product company an issue here? Or is government‘s investment in tobacco product company look unethical & against the law in the eye of broader society, that is an issue here? Or Are insurance companies which protect life investing in tobacco product company which destroys life that is an issue?......We have been made to believe (With the help of media & the cause of PIL) that, the issue is GoI should not fund (invest) in the tobacco product company which may lead to the cancer and untimely death of many as Govt.’s job is to protect the citizens & provide better healthcare to them. With narrow focused mind we can say this is the real issue but I feel none of the above is real issue. We all (not only the govt.) as a nation have failed to stop tobacco consumption which may lead to various types of cancers and consequently huge casualties. This failure in spite of having extensive planning & strategies to reduce tobacco consumption is the real issue in the above context.  The anger of not succeeding into the mission of tobacco consumption reduction has led to file PIL from various parties involved. While the anger is true & justified in some sense but that PIL is not going to put the break on tobacco consumption in India which is the real issue.

Just think from perspective of below line of questions;

•   Let’s say govt. sold all govt. backed investments (around 32%) in ITC in secondary market (Stock exchange) which is bought by other non-govt. entities…..will this change of ownership lead to reduce consumption of tobacco & deaths caused by it in India?  Will this change the current scenario? 
• What is causing cancer? How much different Tobacco products-Cigarettes V/S chewing tobacco products have impact on causing the cancer? Is nicotine a most prominent chemical agent causing the cancer?(In that case we have to be worried about all those non- tobacco products which has nicotine in it). Various medical researches & articles throw light on this aspect but many are still not conclusive. 

2.     Are there no other larger dimensions we can think of deriving from this particular issue? Based on above issue some of the dimensions I would like to touch upon are;

Ø Role of Tobacco production

Ø Extreme narrow focus on tobacco products only

Ø Regulations & socially responsible investments

Role of tobacco production: Are activists against cigarettes only which are generally more hazardous & cause cancer or tobacco which is generally considered to be key contributor to many types of cancer? Logically we should be after tobacco. If we are against tobacco which is major ingredient for cigarettes and other tobacco chewing products, then the concern is not about govt.’s investment in ITC & other cigarette making companies but how(and why) we are silent about existence of ‘Tobacco Board’ which is under Ministry of Comm. & industry, Dept. of Commence, GoI. When India is 3^rd largest producer of Tobacco and nearly earns $ 1 Bil. in the export revenue placing our anger only on cigarette makers, don’t you think is completely unjust & misplaced. When board & ministry are actively promoting tobacco production & because of higher demand more & more farmers are opting for tobacco production how does any policy or any healthcare initiative or protesting outside the HQ of cigarette makers, justify anything in this country! If we are truly concern about growing no. of casualties (around 1 Mil. people die due to tobacco consumption) then why can’t we completely ban tobacco production or cigarette selling in India like Bhutan and Turkmenistan( the practical brain will say there are more than 200 industries which are surviving due to tobacco related business, India will lose ton of revenue & many more reasons to not ban). Then why we keep on blaming cigarette & Gutka makers only, they are not forcing consumers with the gun on their head to buy their products. Consumers with full knowledge of the potential causes and in their right sense buy these products.

Extreme narrow focus on tobacco products only: Though bit older data but many causes of deaths come before cancer caused by specifically tobacco consumption. What have we done to stop top 10 causes of death in India. There are no answers to the questions like why so much of media frenzy about the above issue only? Why are we only after tobacco( Cigarettes & gutka)? Because these are the soft targets. Preventive & curative healthcare & safety system should be designed by keeping in mind top 10 causes of deaths in India.

Regulations & socially responsible investments: Simplest tool in financial economics to control or demotivate the set of activities or businesses, is by reducing money supply to it. Strengthening of existing regulations at state level, country level and international level to make these businesses commercially difficult or unviable will go a long way in reducing tobacco product & consumption both. As India is signatory to World Health Organization’s Framework Convention on Tobacco Control (FCTC) which restricts India from investing in tobacco business this investment may look like breach of this treaty. Recent step by Health ministry asking finance ministry to divert govt. investment from tobacco product company is welcome but very late step.

Socially responsible investments: In the world of investment & funding, socially responsible investment is still a recent phenomena especially for the country like India. Under socially responsible investments, investment companies and even lending companies take pledge to invest or lend to those entities which are high on their social responsibilities like more environment friendly, less carbon emitting, pro-healthcare products, processes etc. Entities which are negatively impacting the environment and contributing directly or indirectly to health hazards of the workers, consumers etc. do not receive any investment under socially responsible investment objectives. I feel time is ripe to boost socially responsible investments as an ideology & objective especially in emerging countries.  If investment & lending community starts critically raising these issues, it can send very strong single.

My brain says when company like ITC which has such a stellar return on investment & decent dividend record and has been darling of institutional investors (Domestic & Foreign) for a long time, govt.’s stake sale from ITC is not going to change the scenario drastically. But my heart says that subsequent debate which is generated due to act of filing PIL may lead to creation of tightened regulatory and socially responsible investment environment in India for taming tobacco production & consumption eventually.