Taxing Junk Food: A Bold Move for Better Health and Economic Growth

The 2024-2025 Economic Survey presented in the Indian Parliament has raised several concerns and policy suggestions aimed at addressing the ongoing health crisis in the country. Among the most significant is the proposal to implement a higher tax rate on ultra-processed foods (UPFs), which has rapidly become a major factor affecting public health, particularly in the context of rising non-communicable diseases (NCDs) and mental health challenges. This move is driven by a combination of growing concerns about the massive increase in ultra-processed food consumption in India and its direct link to various health issues such as cardiovascular diseases, diabetes, cancer, and mental health disorders.

Ultra-Processed Foods: A Growing Concern

The 2023 World Health Organization (WHO) report highlighted a staggering rise in the consumption of ultra-processed foods (UPFs) in India. From a modest USD 900 million in 2006, the market for these foods exploded to an astounding USD 37.9 billion in 2019. This marks an annual growth rate exceeding 33 percent, which is alarming considering the profound impact these foods have on public health.

UPFs are foods that are heavily processed and typically contain high amounts of fat, salt, sugar, and artificial additives. The health risks associated with these foods have been well-documented, with evidence showing that they contribute to physical and mental health deterioration. These foods are often marketed aggressively, targeting children and young adults with misleading advertisements and celebrity endorsements that portray them as healthy or nutritious options.

Products such as breakfast cereals, packaged juices, and chocolate malt drinks are classic examples of UPFs that are widely advertised as healthy but are, in reality, nutritionally inadequate. They are loaded with excessive amounts of sugar, salt, and unhealthy fats, which are directly linked to the rise in obesity, diabetes, heart disease, and other chronic illnesses. The survey also pointed out the need to tackle the misleading nutrition claims and the importance of setting standards for permissible levels of salt and sugar in such products.

In light of these concerns, the government has proposed a higher tax rate for UPFs as a “health tax” measure aimed at reducing their consumption. This proposal is not just about generating revenue but about curbing the rise in diet-related health problems. The report stresses that self-regulation by the food industry has proven ineffective in addressing these concerns globally. Therefore, a tax on UPFs could be an effective tool in the fight against rising health issues linked to poor dietary habits.

The Role of Food Safety and Standards Authority of India (FSSAI)

To further address these challenges, the Economic Survey calls for the Food Safety and Standards Authority of India (FSSAI) to establish clear definitions and regulations for UPFs. This would include stringent labeling requirements, which would enable consumers to make informed choices about the food they purchase. The need for regulations is evident, as UPF manufacturers often use deceptive marketing strategies, including the use of terms like “low-fat,” “sugar-free,” or “nutritious,” which may not reflect the actual nutritional value of the product.

FSSAI’s involvement would ensure that only those food products that meet certain health criteria are allowed to be marketed as healthy, thereby safeguarding public health from misleading advertisements and unregulated consumption of unhealthy foods.

The Link Between Lifestyle Choices and Non-Communicable Diseases (NCDs)

The Economic Survey also delves into the broader issue of lifestyle choices that contribute to the rising prevalence of non-communicable diseases (NCDs) in India. These include poor dietary habits, lack of exercise, inadequate sleep, and excessive screen time. According to the Indian Council of Medical Research (ICMR), NCD-related deaths in India have risen significantly, from 37.9% in 1990 to 61.8% in 2016. This alarming rise in NCDs highlights the urgent need for lifestyle changes at both the individual and societal levels.

Poor eating habits, such as the overconsumption of UPFs, combined with sedentary lifestyles, are major risk factors for the rise of NCDs. These diseases not only have a severe impact on individual health but also place a significant burden on the country’s healthcare system, leading to increased healthcare costs and reduced productivity due to illness-related absenteeism.

Mental Health and Its Economic Impact

In addition to physical health concerns, the survey places a strong emphasis on mental health, recognizing it as a significant economic issue. The rise in mental health disorders, including depression, anxiety, and stress, is directly linked to workplace culture, long working hours, and poor lifestyle choices. A recent survey by Sapien Labs Centre for Human Brain and Mind, India, highlighted the correlation between work environments and mental well-being, revealing that employees with positive relationships at work had significantly higher mental well-being scores compared to those with poor relationships.

The survey also pointed out the detrimental effects of extended desk hours, with individuals working for 12 hours or more at desks showing considerably lower mental well-being scores. This underscores the importance of creating healthier work environments and promoting work-life balance to address the growing mental health crisis in the country. Mental health issues not only affect individuals but also have a negative impact on productivity and economic growth. As the report concludes, hostile work cultures and unhealthy lifestyle choices can impede economic progress and undermine the country’s growth potential.

The Need for a Comprehensive Approach

To address the rising public health concerns, the Economic Survey advocates for a multi-pronged approach that includes:

1. Higher Taxes on Ultra-Processed Foods: The proposal to impose a higher tax rate on UPFs is aimed at reducing the consumption of unhealthy foods and encouraging healthier eating habits. This measure is seen as a way to discourage the marketing and consumption of foods that are detrimental to public health.
2. Regulations and Standards for UPFs: The establishment of clear definitions and standards for UPFs by FSSAI is essential to ensure that food manufacturers adhere to strict guidelines regarding the nutritional content of their products. This would prevent misleading advertisements and help consumers make informed decisions about the food they purchase.
3. Promotion of Healthy Lifestyles: Encouraging healthy eating, regular physical activity, adequate sleep, and reduced screen time is crucial in reducing the burden of NCDs. The government needs to invest in public health campaigns and educational programs that promote healthier lifestyle choices from an early age.
4. Improving Workplace Culture: The survey highlights the need to address mental health in the workplace by fostering positive work environments, reducing long working hours, and promoting work-life balance. This would not only improve mental well-being but also enhance productivity and economic growth.
5. Focus on Preventive Healthcare: The survey advocates for a stronger focus on preventive healthcare measures, including regular health screenings, vaccination programs, and early interventions for lifestyle-related diseases. This would help reduce the long-term costs associated with treating chronic illnesses.

The Economic Survey 2024-25 highlights the growing public health challenges posed by the consumption of ultra-processed foods, poor lifestyle choices, and mental health issues in India. It calls for urgent action to address these issues, including the imposition of higher taxes on UPFs, stricter regulations on food labeling, and the promotion of healthier lifestyles. By taking proactive steps to address these health concerns, India can improve the overall well-being of its population, reduce the burden of NCDs, and ensure sustained economic growth. The survey’s focus on mental health as an economic issue further underscores the need for a comprehensive approach to public health that encompasses both physical and mental well-being.