WB for incentivizing healthy food

New Delhi The World Bank has recommended fiscally incentivizing healthy foods and disincentivizing high fat, sugar and salt (HFSS) foods. The GST Council needs to link their tax structure with the HFSS definitions, it said in a recent report called ‘The Growth of Ultra-processed Foods in India: An Analysis of Trends, Issues and Policy Recommendations.’

The report was prepared by Arpita Mukherjee, Dripto Mukhopadhyay, Eshana Mukherjee, and Rachita Gupta of the Indian Council for Research on International Economic Relations (Icrier).

“A nutrient-based tax model focuses on higher taxes for products which have fat, sugar and salt beyond the recommended levels and lower taxes for the healthier and reformulated options,” the World Bank-Icrier report said. Nutrition-linked taxes have to meet three objectives: incentivize manufacturers to reformulate their products; make healthy products cheaper for consumers; and discourage the production of unhealthy products.

The report favours a clear and transparent definition of HFSS and its product subcategories, which the Food Safety and Standards Authority of India (FSSAI) should come up with in consultation with other stakeholders. The definition of HFSS food should be clear and transparent.

It said that the existing policies and programmes to address the dual burden of undernutrition and overnutrition must be strengthened. While India already has come up with policies and programmes such as Saksham Anganwadi and Poshan 2.0, “these do not adequately cover the issue of overnutrition and unhealthy diet-related diseases.”

Subsidies and other fiscal incentives can drive production, export, and consumption. Hence, these should be linked to nutrition. For example, the production-linked incentive or PLI scheme by the Ministry of Food Processing Industries (MoFPI) can be nutrition-linked rather than any type of food production.

Similarly, the Ministry of Commerce and Industries (MoCI), under the Foreign Trade Policy, can support the export of reformulated and healthy products, the demand for which is rising in key export markets. Global studies show that positive fiscal interventions (for example, subsidies on healthy food) can reduce the prices of the products, making healthy products more accessible to consumers.

“Positive fiscal incentives, such as food vouchers or coupons, can help influence and change consumer behavior towards the consumption of healthy foods. Further, subsidies on inputs like sugar can reduce the cost of manufacturing as compared to other healthier options. Hence, such subsidies may be relooked into based on their health impacts,” the report said.

It has also emphasized on efficient use of advertisements and marketing to ensure nutrition security and suggested restrictions on the marketing and advertising of unhealthy foods. “The advertising and marketing regulation should restrict the promotion of HFSS foods by the manufacturer as well as by the retailer (both offline and online).”