BT Buzz: Who will fund India's mega COVID-19 vaccination?

BT Buzz: Who will fund India's mega COVID-19 vaccination?

Suffering poor financial health, Central government has not given a concrete answer on who will bear the cost of vaccinating Indians - Centre, states, or the people themselves


  • At the discounted rate of Rs 220 per dose, as promised by Serum Institute to the Indian government, the cost of vaccinating 130 crore Indians stands at Rs 57,200 crore
  • Despite COVID-19-induced financial adversities, Kerala, Bihar, Madhya Pradesh, Tamil Nadu, Telangana, Assam and Pondicherry have announced free vaccination programmes
  • First phase of vaccination alone would require around Rs 14,000 crore over and above WHO help under COVAX initiative, a repot by GAVI claims
  • World Bank has approved over Rs 7,300 crore for India to use for any aspect of the vaccination programme
  • India Inc's demand to allow using CSR funds for vaccinating staff has not received any response from the Centre yet

The cost of vaccinating 130 crore Indians against COVID-19 will run into thousands of crores, but who will bear the cost remains unclear. The government has sent mixed signals with no final word on the matter. So, there's no clarity if the vaccine will be free for common people.

Let's look at how much it will cost to vaccinate India's entire population.

Adar Poonawalla of Serum Institute of India, which is producing the Oxford-AstraZeneca vaccine, says the vaccine has been priced differently for the government.

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He says each vaccine vial will cost around Rs 220 ($3), which means two doses required to generate antibodies will cost around Rs 440 per person. So, to vaccinate 130 crore Indians, the cost will come to Rs 57,200 crore. This does not include the infrastructure and logistics costs, which will also run into thousands of crores.

The government's finances have been majorly hit this year as the country went into lockdown for a long period after March 25, recording a historic fall of 23.9 per cent in its Gross Domestic Product (GDP) in the first quarter. The government has announced various schemes under Atma Nirbhar Bharat stimulus package worth Rs 20 lakh crore. So, it remains to be seen if the government bears the fiscal burden or transfers it to private players, which means people pay from their pockets to get vaccinated.

Poonawalla's statement that there will be a different price for the vaccine in the private market throws light on the matter. "For the private market, it'll be about Rs 700-800," he said. It means the government alone will not provide the vaccine. The vaccine will be available for people to buy from chemist shops, hospitals or heathcare centres.

Poonawalla has said the government will handle everything initially: the rollout, coordination with state machinery, logistics required to get the vaccine to the most vulnerable and frontline workers. "Once you cover the elderly and healthcare workers, the general public, healthy individuals like us, can slowly start getting the vaccine," he said.

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"Eventually, the emergency use licensure will mean that we'll give the vaccine to the most vulnerable first... that the government is going to distribute and then after that in March and April, it should probably be available to the general public at chemist shops and other private hospitals, etc."

To begin, India will have 50 million vaccines, provided SII gets a go-ahead from the drug regulator in January and it does not have to export the vaccine to other countries. SII has manufactured 50 million doses of Covishield vaccine on at-risk funding (partly borne by the Bill & Melinda Gates Foundation). As the vaccine gets approval, it plans to add 100 million vaccines every month from February. Overall, the vaccine giant aims to develop 3.2 billion doses at its facilities. Besides India, SII also has exclusive rights to sell the vaccine to 68 countries across the world. Other pharma companies, that are in the race, are yet to come up with their prices per vaccine.

Will all Indians be vaccinated?

There's little clarity on how much of the population will be inoculated. Though PM Modi had earlier said that every single Indian will get the vaccine, a top health official has said things to the contrary.

"I would like to assure the nation that, as and when a vaccine becomes available, everyone will be vaccinated. No one will be left behind," Prime Minister Narendra Modi had said in October in an interview with a national daily.

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But on 1 December, Health Secretary Rajesh Bhushan said at a media briefing that there may be no need to vaccinate the country's entire population. He added the government had not spoken about inoculating everyone in the country.

However, Bhushan has said 30 crore people from priority groups will be vaccinated first. These 30 crore Indians come from three groups - 1 crore healthcare providers, 2 crore frontline workers and 27 crore people over 50 and under 50 with co-morbidities.

"We believe in the initial phase, vaccination will be limited. However, it'll increase in subsequent months. Therefore, all different priority groups can be vaccinated together," said Bhushan.

Global help

In Phase 1, India will require around $1.4 billion-1.8 billion (roughly Rs 14,000 crore). That's despite getting help from the WHO-led COVAX global vaccine-sharing scheme, a report by GAVI, an alliance of governments, pharma players, NGOs and charitable trusts, has claimed. The WHO, under the COVAX facility, has assured to help poor and middle income countries to fund their diagnostic tests, drugs and vaccination programmes.

The GAVI report, assessed by global news agency Reuters, says if India gets 190-250 million shots under COVAX, it'll still need $1.4 billion (about Rs 10,200 crore) to fund the phase 1 programme. If India gets a lower allocation of 95-125 million doses, it'll have to bear additional cost worth Rs 1.8 billion (about Rs 14,000 crore).

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This will hit the Centre's finances. Sample this: India's total budget for the ministry of health and family welfare FY21 stood at Rs 67,111.8 crore. In FY20, the Centre over-utilised Rs 64,609 of the Rs 64,559.12 crore allocated for the ministry. At the rate at which Serum is supplying to the government (Rs 220 per dose), the cost of vaccinating the entire Indian population stands at Rs 57,200 crore.

Back in September, Poonawalla had tweeted that the government would need "Rs 80,000 crore over the next one year to buy and distribute COVID-19 vaccines to everyone in India and this is going to be the next challenge the country needs to tackle." Centre had disagreed with the estimate and assured that it has enough funds for the COVID-19 vaccine.

As per GAVI, the low range of support from COVAX won't help India in defeating coronavirus. Besides, India will need at least $30-80 million (Rs 584.4 crore) to ramp up infrastructure to ensure smooth transportation and storage of the vaccines.

The World Bank has also approved $1 billion (over Rs 7,300 crore) for India, allowing it to use these funds for any aspect of the vaccine programme, among the $12 billion approved to help low and middle income countries finance their vaccine programmes.

"The World Bank is working in close partnership with the Government of India to provide urgent and flexible support to the country as it fights the spread of COVID-19," said Junaid Ahmad, World Bank Country Director for India.

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States ready to vaccinate people for free

States' finances have been badly hit due to COVID-19. Despite that some have said they'll vaccinate their entire population for free. States like Kerala, Bihar, Madhya Pradesh, Tamil Nadu, Telangana, Assam and Pondicherry have announced free vaccination programmes. Some states like Kerala have already formed multi-tier committees -- state steering committee, state task force, district task force and block task force -- as part of the coordination mechanism for vaccine introduction. But where will the funds come from? They have not revealed so far.

The Bharatiya Janata Party (BJP), while releasing the manifesto for Bihar assembly polls in November, had promised to provide free COVID-19 vaccine to every person in Bihar if the National Democratic Alliance (NDA) returned to power in the state. The BJP-JD(U) alliance sprung to power and now it's expected to fulfil its poll promise.

Corporate funds

Another big source of funding could come from India Inc. Some corporates have come out with suggestions pertaining to the vaccination. Companies want the government to allow them to use corporate social responsibility (CSR) funds to vaccinate their employees. This recommendation was based on a FICCI-E&Y report released earlier this month. The report mentioned that 30 crore people in priority groups (22 per cent of population) will be vaccinated by August 2021 and another 50 crore by 2022-end. Centre is yet to respond to the demand of using CSR funds for vaccination.

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Published on: Dec 31, 2020, 9:47 PM IST
Posted by: Vivek Punj, Dec 31, 2020, 9:47 PM IST