India’s universal vaccination drive against Covid-19 is estimated to cost just 0.36% of the gross domestic product, according to India Ratings and Research.
To vaccinate the currently eligible 84.2 crore population, states and central government will have to collectively spend Rs 67,193 crore, the rating agency said in a research note. Of that amount, the union government will incur Rs 20,870 crore and state governments together will incur Rs 46,323 crore.
“India Ratings believes 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’s too small an amount,” the note said. “The fiscal impact on the union budget would be 0.12% of GDP and on the state budgets would 0.24% of GDP.”
The government recently announced the third phase of its vaccination drive where everyone above the age of 18 can get vaccinated from May 1. The more liberal policy also allows vaccine manufacturers to supply up to 50% of their supply to the centre and 50% to states and the open market. Vaccinations will continue to be free at government centres and hospitals for frontline workers and those above 45 years of age.
The move to decontrol vaccine supply came as rising cases in the country have brought its healthcare system to the brink of a collapse. Hospitals and dedicated Covid care centres, overwhelmed by patients, are running out of beds, oxygen and critical drugs.
According to India Ratings, a sum of Rs 5,090 crore has already been spent for procuring 21.4 crore doses so far. The remaining amount required to be spent for procuring 155.4 crore doses will be Rs 62,103 crore.
Pune-based Serum Institute of India, which is the world’s largest vaccine maker, has said it will charge states Rs 400 per dose of Oxford-AstraZeneca’s Covishield. It had earlier entered a contract with the central government to provide the first 100 million shots at Rs 236 per dose, including statutory taxes. A similar price was charged by Hyderabad-based Bharat Biotech for its Covaxin doses. India Ratings’ estimates are based on the assumption that any further supply for the central government will cost them Rs 400 per shot.
This would be a recurring expenditure on union and state budgets since the antibodies generated by these vaccines are likely to last for 12-18 months, India Ratings said.
The maximum impact of Phase 3 of vaccination is likely to be on the budgets of Bihar (0.60% of GSDP), followed by Uttar Pradesh (0.47%), Jharkhand (0.37%), Manipur (0.36%), Assam (0.35%), Madhya Pradesh (0.30%) and Odisha (0.30%). Many states such as Kerala, Chhattisgarh, Bihar and Madhya Pradesh have already announced that the government will bear the cost of vaccination.
India Ratings also said that vaccinations by large corporate groups will reduce pressure on state and central budgets. “However, more than the money spent, the critical factor would be how soon the desired level of vaccination can be achieved,” it said.