Why can’t vaccines be free? Indian Ratings study claims inoculating every Indian costs less than 1% of annual GDP


The Indian Ratings study claims if the Centre and states collaborate to vaccinate all Indians aged above 18 years — estimated at 84.2 crores out of 133 crore — it would cost Rs 671.93 billion.

A study called the Indian Ratings study has suggested that the total cost of vaccinating every Indian above the age of 18 years should cost less than one per cent of the country’s annual Gross Domestic Product (GDP). The study comes at a time when a new vaccine policy was announced in India and the Centre and states have been at loggerheads about the pricing difference of Coronavirus vaccines. In the fourth phase of inoculation, everyone above the age of 18 years will be eligible for the vaccines from May 1, the Indian government announced recently. The Indian Ratings study claims if the Centre and states collaborate to vaccinate all Indians aged above 18 years — estimated at 84.2 crores out of 133 crore — it would cost Rs 671.93 billion. So, the question is if the estimation is correct, then why can’t every Indian get the vaccine for free? Why is the vaccine priced differently for private players, states and the centre? Let’s see in detail what the Indian Ratings study has to say about the vaccine cost and why is quick inoculation important at this stage.


The Indian Ratings study findings

The Indian Ratings study estimates the cost of inoculating 84 crore people at Rs 208.70 billion for the central government, while state governments will have to spend a combined amount of Rs 463.23 billion. The estimate shared in the study is currently based on the vaccine price formula announced on Wednesday. India Ratings said that $671.93 billion is just 0.36 per cent of the country’s annual GDP and is not an unattainable amount for the government to spend on something this integral. If the cost burden is split between the Centre and respective state governments, the fiscal impact on the Centre’s budget would be 0.12 per cent of GDP and 0.264 per cent on the state budgets, Indian Ratings stated in the study. “Given the magnitude of the problem and the economic cost the second wave of Covid-19 pandemic is likely to inflict on the economy, it is too small an amount,” India Ratings said.
As per the study, the maximum impact will be on “Bihar’s Gross State Domestic Product (GSDP) at 0.60 per cent, following by Uttar Pradesh (0.47 per cent), Jharkhand (0.37 per cent), Manipur (0.36 per cent), Assam (0.35 per cent), Madhya Pradesh (0.30 per cent) and Odisha (0.30 per cent).” It added, “Of the total requirement of vaccines, a sum of Rs 50.90 billion has already been spent for procuring 214 million doses and the remaining amount required to be spent for procuring 1,554 million doses would be another Rs 621.03 billion.”
The study, however, also pointed out that this could be a continuous expenditure on Centre and state budgets as the antibodies generated by COVID-19 vaccines are likely to last for approximately 12-18 months. The Indian Ratings study also takes into account that several states such as Kerala, Chhattisgarh, Bihar and MP have already announced that they will take care of the cost of vaccinating individuals above 18 years from May 1 in their respective states.
The Indian Ratings study also highlights that quicker vaccination is a must to achieve faster protection to the Coronavirus.

What are the changes in procurement and distribution of vaccines after the government’s announcement?

In the first three phases of inoculation, when healthcare workers, frontline workers, and those above the age of 45 were vaccinated, the Centre procured the entire quantity of vaccines from the manufacturers, Serum Institute of India (Covishield) and Bharat Biotech (Covaxin), and distributed it to states. The states distributed the stock to government vaccination centres, which administered the vaccine free of cost, and to private hospitals that charged citizens Rs 250 per dose. From May 1, the supply will be divided into two sections: 50 per cent for the Centre, and 50 per cent for the open market. Through the second — non-Government of India — channel, state governments, private hospitals, and industries that have facilities to administer the vaccine, will be able to procure doses directly from manufacturers.
First, the 50 per cent basket of vaccine doses earmarked for states and private hospitals in the open market will be used to vaccinate those above the age of 18 years, which means you will have to pay for the vaccines. Serum Institute of India (SII) on Wednesday announced the prices for its vaccine — Rs 400 per dose to states, and Rs 600 per dose to private hospitals. Bharat Biotech and Dr Reddy’s (which will distribute the Russian Sputnik V shot approved by the Indian government) have not made an announcement yet. Second, free vaccination would still be available at all government vaccination centres that receive doses from the centre— with those doses, healthcare workers, frontline workers, and those above 45 will continue to be vaccinated.

#OneNationOnePrice: Why are vaccines differently priced for states?

Even though the new vaccine policy looks like good news as vaccines will soon be accessible to all, but the pricing still has everyone concerned, especially the states. Senior Congress leader Jairam Ramesh criticised the Union government over differential pricing of Covishield vaccine, saying the Centre getting it at Rs 150 per dose and states at Rs 400 is no cooperative federalism. Taking to Twitter, he wrote, “Central Govt will continue to pay Rs 150 per dose for Covishield. The state governments will now be charged Rs 400 a dose. This is not cooperative federalism. This will bleed dry the already reeling state finances. Atrocious! We demand One Nation, One Price for Centre & State governments.”
“It is apprehended that the announced policy might lead to unscrupulous mechanisms in the market, including pricing of vaccines as it appears to be based on market prices which may put the common people under huge financial burden. More importantly, the supply would also become very erratic because the vaccine manufacturers are hardly prepared to scale up their production capacities to the desired levels to meet the nationwide demand,” West Bengal Chief Minister Mamata Banerjee said in her letter to Prime Minister Narendra Modi after the announcement.

We will have to wait and see if it will be a fair distribution after all in the coming days. Right now the states’ concerns seem legit until manufacturers too ramp up vaccine production to meet the demands of the entire country.


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