Fat Tax and Junk Food

The Modi government's re-  ported plan to impose a "fat tax" on all junk foods and soft drinks has stirred up a controversy. On the surface, the idea is a response to the alarming rise in obesity and diabetes in India. However, it is fast turning into a tussle between powerful lobbies representing global multinational companies on the one hand and newly emerging manufacturers of desi products like Ramdev's Patanjali.

It is being said that the Finance Minister has passed the buck on to the Prime Minister to personally resolve the issue and take a call on whether to go ahead or not. The case for a fat tax is that evidence is growing that obesity may be the next major health challenge in the country. According to the National Family Health Survey, one-fifth of Indian women, or 20.7 percent to be precise, in the age group of 15-49 are overweight.

NFHS-4, which is country's most apprehensive health survey shows that 31.3 percent of urban women are obese, while 15 percent of rural women are overweight. This is a 60 percent rise in the overall obesity figure for women from just 12.6 percent ten years ago when the last NFHS was conducted.

The figures are even starker for men with the proportion of overweight men having doubled over the last 10 years. As per the survey, 18.6 percent of men (15-49 years) are obese--up from 9.3 in 2006.

Obesity leads to higher risk of developing a number of potentially serious health problems, including heart disease, stroke, diabetes, breathing disorders, osteoarthritis, infertility, liver disease, kidney disease and some cancers.

As against this health aspect, any crackdown on packaged fast foods and breakfast cereals being marketed by giant global corporates could have a serious impact on the government's policy to attract foreign investments.

No doubt a strict tax on all junk foods will severely disrupt the 57 billion dollar food and beverage food industry in the country. Big brand MNCs are even resisting stricter labelling rules on fatty and sugary foods they are currently marketing on a gigantic scale among Indian middle class consumers.

The stakes are very high because major food and beverage companies have poured billions into India's growing economy. Giant MNCs like PepsiCo and Nestle have been lobbying with politicians, bureaucrats and chambers of commerce at both the Centre and the States against any draconian regulation which threatens their business. They have been expressing suspicions that the real motive behind the fat tax move is to promote indigenous junk food manufacturers like Patanjali, who wield enormous influence within the Sangh Parivar and are making distorted claims of using only organic ingredients based on ancient recipes.

This intense lobbying has somehow given the tussle a modern science versus traditional Hindutva twist. The matter has become complicated because in recent months, two States ruled by non-BJP governments, Kerala and Tamil Nadu have been in the forefront of agitations against soft drinks companies like Pepsi and Coca-Cola on the ground that the big foreign brands are exploiting scarce groundwater resources in the drought-prone regions of south India.

Earlier this year, fearing that a fat tax may be announced in the Union Budget, top executives from Nestle and ITC (an Indian-owned conglomerate) met officials and trade associations in Mumbai and New Delhi to coordinate efforts and urge the government to resist pressure from health advocates and Hindutva activists.

Caught in the crossfire were office-bearers of the All India Food Processors' Association (AIFPA), whose members range from street vendors to Indian companies to global conglomerates. The decision that emerged from the heated discussions is that a joint representation should be made to Modi government Ministers and health and food officials to express concerns about stringent regulations.

Currently, India's carbonated drinks sector is estimated to grow an average 3.7 percent annually between 2017 and 2021, while the packaged food sector is expected to grow by 8 percent a year. This would be totally upset if any fat tax is imposed, as PepsiCo CEO Indra Nooyi is understood to have bluntly told a top official in the PMO.

In turn Nooyi was asked to explore ways to reduce sugar in beverages sold in India. Similarly, a senior Nestle India executive Sanjay Khajuria issued a statement saying the company was "working to improve the nutrient profile" of their products. He told newsmen that "these are complex public health issues which require a holistic multi-stakeholder approach and we are committed to work with authorities, but any drastic tax would be counter-productive".

The head of the Food Safety and Standards Authority of India (FSSAI), Pawan Kumar Agarwal, was more diplomatic. He welcomed industry concerns about tougher rules but said it would be "a good thing if healthier options were explored".

Vol. 49, No.43, April 30 - May 6, 2017