New ‘liberal’ policy: States to spend a tidy sum for vaccination drive

Of course, the actual cost would be much less given that 100% vaccination is unlikely; also a segment of the healthcare workers and other frontline workers who have already received vaccine are in the 18-45 age group.

States may have to spend a tidy sum to procure vaccines for inoculating those in the 18-45 years age bracket. On Wednesday, top vaccine maker Serum Institute of India said it would be providing its Covishield vaccine at Rs 400/dose to the Centre and state governments while providing at Rs 600/dose to private hospitals from May 1.

According to a rough estimate, if all states manage to give the vaccines free for cost to all the target population, and the private sector vaccination doesn’t pick up, then they will have to incur expenditure of over Rs 45,000 crore.

There are about 53 crore people in the country in the age bracket of 18-45 yeears.

Many states, including Uttar Pradesh, Madhya Pradesh, Assam and Chattisgarh, have already announced schemes of free vaccines to the eligible people from May 1. Kerala has been implementing a policy of free-of-cost vaccination to its population.

The Centre on Monday announced a ‘liberalised and accelerated’ Covid-19 vaccination programme beginning May 1, where all above 18 years of age will be eligible to be vaccinated. Also, vaccine manufacturers have been empowered to release up to 50% of supplies directly to states and in the open market at pre-declared prices, a move that would boost availability of the prophylactics to the people.

If all states opt for the free vaccination drive, it could cost them about Rs 42,000 crore (for 106 crore doses for 53 crore adults) at Rs 400/dose. There would be another Rs 100/dose expenditure towards vaccine-related administrative expenditures, which could cost another Rs 10,000 crore. Of course, the actual cost would be much less given that 100% vaccination is unlikely; also a segment of the healthcare workers and other frontline workers who have already received vaccine are in the 18-45 age group.

The Centre’s current vaccination drive would continue as planned earlier, providing free vaccination for essential and priority populations as defined earlier (healthcare workers, frontline workers) and vaccination for people above 45 years of age. The Centre will have at its disposal 50% of the vaccines being supplied by the manufacturers.

For Covid-19 vaccination, the Centre’s Budget for FY22 has made a provision of Rs 35,000 crore to cover 50 crore people (Rs 700/person for two doses, including vaccine cost of Rs 400-500). Before the price revision announced by SII on Wednesday, the prices fixed by the Centre were at Rs 500/person (Rs 300 vaccine cost and Rs 200 administrative expenses) for two doses. The Centre may have to enhance a bit its budget allocation for vaccination given the vaccine price increase.

Health expenditure, which was only about 5% of states’ annual aggregate expenditure in recent years, rose substantially in FY21 due to a rush to build healthcare infrastructure and purchase of medical equipment to battle Covid-19.

India (the Centre and states) spend 1.26% of GDP (FY20BE) on health, way behind Brazil at 6.8%, Turkey 10.5% and Mexico 11.6%. States were estimated to spend spend about Rs 1.9 lakh crore in FY20BE while the Centre about Rs 77,000 crore.

According to the Constitution, the health sector falls under the state list and, thus, the provision of financing public health expenditure is primarily the responsibility of states. However, the Centre also implements a number of centrally-sponsored schemes such as the National Health Mission (Urban and Rural), National Mission on AYUSH and the Ayushman Bharat scheme.