Vaccines for free or at open market prices? India’s got a big...

Vaccines for free or at open market prices? India’s got a big dilemma ahead of budget

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The year 2020 will be known as the year of the pandemic and the year 2021 will be known as the year of the vaccination. The bygone year didn’t belong to the industries or the technology, it belonged to healthcare. Healthcare came under the spotlight it long deserved in the past year. While gaining popularity, a lot of gaps in the existing healthcare infrastructure also came to the forefront which some may argue but were taken care of by the Indian Government in its own ingenious ways given the constraints and challenges of a geopolitically diverse country like ours.

With the initial learnings, a huge challenge facing the government of the second most populous nation in the world is vaccinating its people against the virus. In addition to the most frequently asked questions about the vaccine rollout in the country, what is of concern is where the finances will come from. The question is pertinent as India has one of world’s largest Universal immunization programmes (UIP). Vaccination against Covid is not part of the existing UIP. India spends 1.3 per cent of GDP on health, less than half of what China does, a third of Brazil’s outlay. Last year’s union budget had allocated just under $10 billion to healthcare.

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The question of money has become a talking point as the economy of the country at present is not witnessing its finest hour — rather the opposite. It is still trying to come out of the woods. Currently, India is the second most Covid-affected nation on the planet. A report by GAVI Vaccine alliances estimated that in addition to the support being extended to India under the COVAX global vaccine sharing scheme, the country will need an additional $1.4 billion to inoculate over 300 million people in the first phase of the vaccine rollout. The GAVI report also identified India’s economic burden due to the Covid-19 pandemic as “disproportionate” and suggested a donor-funded plan of $1.3 billion to secure 190-250 million doses.

Two vaccines, namely Covishield (SII) and Covaxin (Bharat Biotech), received Emergency Use Authorisations in India on 3rd January, 2021 and January 6th, 2021. The first phase has been rolled out from 16th January, 2021 across the country. The government has placed an order of 55 lakh doses amounting to Rs 162 crore for Covaxin and a purchase order for 1.1 crore doses worth Rs 231 crore with a commitment to procure additional 4.5 crore doses by April, 2021 amounting to a total of Rs 1,100 crore.

In addition, India also required an additional $30 million to $80 million for the infrastructure required to transport and store vaccines which must be kept at very low temperatures, but the decision of the government to utilise the existing infrastructure established for the Universal Immunisation Programme has resulted in reducing this additional financial burden.

The enormity of the task at hand can be gauged from the fact that it’s been touted as the World’s biggest vaccination drive. The Central government has committed to bearing the cost of vaccinating nearly three crore healthcare & frontline workers in the country. It, however, has yet to declare its position on a plan for the remaining population of the country. Health being a state subject, we may see different models across different states depending on whether the remaining population will need to procure vaccines from the open market, or the govt decides to provide them in a controlled manner. This is likely to have a varied impact on state budgetary provisions depending upon the policy adopted.

If India provides vaccine free-of-cost to its entire population, an estimated 54% of the health budget will have to be spent only on vaccination.

On the anvil of the 2021 Budget, the big question is how the country will fund this mammoth task, especially at a time when the economy is still recovering. In my opinion, much will depend on whether India decides to vaccinate the entire population, or just the 70% needed to achieve herd immunity.

Another way could be to test the antibody levels of potential vaccine beneficiaries, with only people with zero antibodies being given priority.

Instead of providing the vaccine free of cost to the entire population, the government could consider giving the vaccine free of cost to certain sections of the society. The remaining should be given the option to purchase the vaccines from the open market at subsidised rates. Though there are talks of revenue-sharing measures or of an introduction of a cess for additional finances, the answer to the same is still awaited.



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