How much will India’s Covid-19 vaccine programme cost—and how will budget 2021 fund it?

All eyes on the budget.
All eyes on the budget.
Image: REUTERS/Adnan Abidi
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India’s union budget, which will be announced on Feb. 1, will need to account for the country’s vast and ambitious Covid-19 vaccination programme.

India approved two coronavirus vaccines for emergency use on Jan. 3, and the vaccination drive began on Jan. 16.

As part of the first phase of this inoculation, the government has procured 11 million doses of Serum Institute of India’s (SII) Covishield, manufactured from the master seed of the Oxford-AstraZeneca vaccine. It has also bought 5.5 million doses of Covaxin, India’s homegrown vaccine manufactured by Bharat Biotech.

But the vaccine shots officially purchased so far would cover only a small section of the 30 million frontline and healthcare workers with whom the government has begun its inoculation programme. Both Covishield and Covaxin are two-dose vaccines, and India would need 60 million doses to fully cover all its essential workers.

The pace at which the government is procuring these vaccines could be a sign of the fiscal distress that it faces. India’s central government has consistently missed its fiscal deficit target which was set at 3% under the Fiscal Responsibility and Budget Management Act, 2003.

During the union budget of 2020-21, the government had set itself a fiscal deficit target of 3.5%. Analysts believe that this figure could balloon to 7% because of the pandemic and the government’s stimulus for the economy last year. Under the “Atmanirbhar Bharat” (self-reliant India) programme, the central government had announced a stimulus package of Rs20 lakh crore ($266 billion) in May 2020.

In this context, funding a vaccination drive for 1.3 billion people could be like looking for change under the sofa cushions.

The cost of Covid-19 vaccines

The government has negotiated a price of Rs200 per dose for SII’s Covishield. For Covaxin, the government will pay Bharat Biotech Rs295 per dose. But given that the company is offering the first 1.65 million doses free of cost, the cost for 5.5 million shots comes down to Rs206 per dose.

Even at the lower end of the spectrum, 60 million doses would cost the government Rs1,200 crore for just the first 30 million people, or a little over 2% of India’s population. This figure also does not include the cost of transporting the vaccines, nor the manpower resources  needed to administer them.

India has also committed to vaccinating an additional 270 million people by August, which will include people aged over 50, and those below 50 but with comorbidities. If India were to make the vaccine free for this phase of the inoculation as well, the financial outlay will be 10 times more.

India will need to budget a substantial amount of its expenditure towards vaccines, even if it were to get shots as support from the COVAX global vaccine-sharing programme. Gavi, the vaccine alliance, has said in an unpublished report that India will need anywhere between $1.4 billion and $1.8 billion (Rs10,248 crore and Rs13,176 crore) for the vaccine initiative for 300 million people, Reuters had reported.

For context, during budget 2020, the total healthcare budget announced by finance minister Sitharaman was Rs69,000 crore.

And healthcare experts warn that the government should not cut corners on this expense.

Should the Covid-19 vaccines be free for everyone?

Public health advocates argue that the vaccine should be free for all individuals at least till the time the pandemic rages on. “Even countries like the US, where healthcare is largely private, is providing the Covid-19 vaccine for free,” says Chandrakant Lahariya, a vaccine and health systems expert, and co-author of Till We Win: India’s Fight Against the Covid-19 Pandemic. “From a public health perspective, vaccines during the course of the pandemic should be completely free,” he argues.

This is because vaccines not only represent a larger, public good, but the possibility of a reduction in the number of serious cases could potentially ease the burden off the government’s health infrastructure.

But should those who can afford the vaccine not be able to pay for it? “Not if it means jumping the priority queue,” Lahariya cautions. SII’s CEO Adar Poonawalla has estimated that the Covishield vaccine could be available in the private market for Rs1,000 per shot, five times what it would cost the government.

Once available, Indian companies and large corporations would want to procure vaccines for their employees. “At the end of the day, the vaccine should be free for the individual, even if his or her company is paying for it,” he says.

But given the limited number of vaccines currently available both at Bharat Biotech and SII, epidemiological prioritising is key. Vulnerable populations need to be vaccinated first in order to contain the serious cases and fatalities due to the pandemic. “But if one allows those who can afford it to buy the vaccine right now, that limited supply will go to only those people who have money. This will lead to inequity,” he says.