From chicken nuggets to sodas: Economic Survey suggests higher taxes on ultra-processed foods

These foods are known to cause and increase the risk of several conditions such as obesity, diabetes and other metabolic conditions, gastrointestinal diseases, and cancers among others.

The challenge, the economic survey says, is the convenience, hyper-palatability, and longer shelf lives of these products along with vigorous advertising, has made ultra-processed foods an increasing part of Indian diets. The survey says that the ultra-processed food segment grew at a CAGR of 13.7 per cent between 2011 and 2021. If year-on-year growth of this segment is considered, there was a dip seen in 2020, likely owing to the impact of the pandemic. The growth rate declined from 12.7 per cent to 5.5 per cent in 2020 and jumped back to 11.29 per cent in 2021.

The household consumption expenditure survey also shows that rural India spent 9.6% of its food budget on ultra-processed foods and urban India 10.6%.

The report suggests a multi-pronged strategy to address the issue: One, it suggests that the Food Safety and Standards Authority of India (FSSAI) bring ultra-processed foods under a regulation with clear definitions and standards for such products, including stricter labelling norms. Two, it suggests improved monitoring of branded products to ensure compliance of such norms, adding further that self-regulation by the industry has not been effective. Three, strengthened consumer protection efforts have been suggested to deal with aggressive marketing and misleading advertising. Four, the survey says that a higher tax rate for ultra-processed foods may be considered, targeted specifically towards brands and products that are advertised. Five, and importantly, it suggests creating awareness among consumers, especially children and adolescents to whom many of these products are marketed.

“The survey has raised a very important issue and the measures suggested to reduce consumption of ultra-processed foods is spot on. However, these measures have to be implemented. If it is done today, it will still take five to ten years to see the impact on the increasing lifestyle diseases,” said Dr Arun Gupta, convener of Nutrition Advocacy in Public Interest (NAPi), whose report was quoted by the survey.

He goes on to say: “It is important that we focus on the dietary patterns of the people instead of a single ingredient — reducing just salt, sugar, or oil does not help. Another important issue raised by the economic survey is that of the conflict of interest. The survey clearly says self-regulation does not work. In the last couple of years we have had companies making statements like we have reduced sugar by 14% or so, but the actual quantity of sugar in the product continues to remain high, so it doesn’t really help in improving the health of people.”