Need to fix the fiscal responsibility of the Union government on Vaccination

Amidst complaints of vaccine shortages, the Centre has now rolled out phase 3 of Covid vaccination on 19^th April 2021 where everyone above the age of 18 is eligible for getting vaccinated. But the cost of vaccinating the 18 to 45 age group should either be borne by States or citizens. The many States have announced free vaccines for all adults from May 1 but at the same time, many states complained about the fiscal burden on the state exchequer. So, the natural question that arises is – Does the central government have the fiscal space to do so?

The answer lies in the Budget speech dated 1^st February 2021 where Finance Minister Nirmala Sitaraman announced “I have provided 35,000 crores for Covid-19 vaccine in BE 2021-22. I am committed to providing further funds if required" (Paragraph 38). Two days later on 3^rd February, Expenditure secretary of the Finance ministry, T.V. Somanathan, addressed the press and elaborated the government plan and projection of the vaccination drive. He said that the government planned to vaccinate 50 crore adults in one year and the projected cost to vaccinate one citizen is Rs.700.

Now, take look at the supply side.  Serum Institute of India (SII) can produce 70 crore dose of covishiled per year. Bharat Biotech can make 15 Crore does per year. So, the Cumulative capacity of these two is to provide 85 crores of dose per year. With all 85 crore doses, Government can vaccinate only 40 Crore Indians, which is 10 Crore lesser than a projection of the finance ministry.

We need to remember that this whole analysis is based on the projection of Rs.700 as the cost to vaccinate one citizen. Union government procured the Covishield at a price of 300/ Person and Covaxin at 450/person. So, the Per personal vaccination cost likely overall lower than 700 when we include the cost of the logistics, syringe, etc.

When one connects the dots of the supply and demand of the question, the whole picture can be visible. The central government has the fiscal space to procure 100 crore doses in one year. Two Providers' cumulative capacity of vaccine production is 85 crores. That means the Central government itself can manage the whole vaccination drive.

But Central government has a different plan.  In phase 3, the Central government shifted the financial burden of the vaccination of under 45 age citizens to states. Central keep the responsibility to vaccinate citizen above 45 on its shoulder. As per the Analysis of the Busineslline, the total cost of vaccination to the Centre will be around 10,234 crores which is just 33% of the announcement of the 35,000 Cr.

History repeats itself. When GST was introduced, the Union government promised the revenue compensation to states for 5 years but didn’t keep that promise. Now, the government showed the back to states and citizens on the vaccination of the covid.