Even as leading doctors and executives of Tata Trusts
in their personal capacity have filed a PIL
(public interest litigation) petition against public sector insurance
companies for their investments in tobacco
stocks, the petitioners have omitted an important investor category of tobacco
stocks: The mutual funds
that own shares in tobacco
One of the petitioners, Sumitra Hooda Pednekar, wife of the late Satish Pednekar, former minister of Maharashtra who died of oral cancer, has been vocal about the taxes that the government earns from tobacco
industries, and also the profits that Life Insurance
Corporation, financial institutions, and mutual funds
have made from their investments in tobacco
Statistics collated by this newspaper show mutual funds
own shares of Rs 14,000 crore in tobacco
companies, with Rs 13,500 crore in tobacco
major ITC as of March 2017.
On Thursday, Pednekar and six others filed the petition in the Bombay High Court, seeking the court’s directions to public sector insurance
firms to sell their holding in tobacco
companies. The petition said while the government had committed itself to tackling the problem of tobacco
and its harmful effects, the insurance
companies, along with SUUTI (Specified Undertaking of Unit Trust of India), in complete disregard for the government’s policy, continue to invest in ITC.
Tobacco products are responsible for millions of deaths worldwide each year as their use is considered a major factor in stroke, heart attack, lung diseases, and cancer. Investment companies, including mutual funds, in the US and Europe are egged on to sell their stakes in tobacco companies.
Investments by insurance
companies in the West are especially targeted because they not only sell health and life insurance
but also slap higher premiums on smokers. Hence, critics say they profit from investing in tobacco
companies and charging higher premium from smokers.
But over the years, some funds, especially retirement funds and insurance
companies in the US, Canada, and Scandinavian countries, have sold their sin stocks, which fall in the tobacco, gambling, arms, and liquor segments, and casinos.