Vaccination / Vaccinating everyone above 18 years of age to cost 0.36% of GDP: India Ratings

New Delhi: Vaccinating all citizens above the age of 18 years against Covid-19 will cost ₹67,193 crore, of which states together will incur ₹46,323 crore, India Ratings and Research (Ind-Ra) said on Thursday.

As the second wave of Covid-19 sweeps the country with alarming speed and severity, the government has announced a liberalised and accelerated Phase 3 strategy of Covid-19 vaccination. Under this scheme, all persons above 18 years of age will be eligible to get Covid-19 vaccine doses from May 1.

"This means that the total size of the population that will now be eligible for vaccination would be 84.19 crore out of the total population of 133.26 crore," it said a note.

India Ratings calculated that this "may cost ₹67,193 crore, of which the Union government will incur ₹20,870 crore and state governments together will incur ₹46,323 crore".

The government has made the pricing, procurement, eligibility and administration of coronavirus vaccines flexible. While the vaccination drive will continue as before, providing free vaccination to priority populations such as healthcare workers, frontline workers and population above 45 years of age, states and Union territories have been allowed to procure additional Covid-19 vaccine doses directly from the manufacturers and open-up vaccination to people above the age of 18 years.

As a result, Indian vaccine manufacturers would now be supplying 50 per cent of their production to the central government and the balance 50 per cent would be available for procurement by the state governments and the open market (private hospitals).

Ind-Ra said the Union government has already spent ₹5,090 crore on procuring 21.4 crore vaccines from Serum Institute of India and Bharat Biotech.

Assuming two doses of vaccines at ₹400 per dose for new vaccine procurement and 5 per cent wastage, the cost for the central government will come to ₹62,103 crore for 155.4 crore doses, it said.

The total of the two comes to ₹67,193 crore which "works out to be just 0.36 per cent of GDP," it noted. "If we split it between the Union government and state governments, then the fiscal impact on the union budget would be 0.12 per cent of GDP and on the state budgets would 0.24 per cent of GDP".

The maximum impact is likely to be on Bihar (0.60 per cent of gross state domestic product or GSDP), followed by Uttar Pradesh (0.47 per cent), Jharkhand (0.37 per cent), Manipur (0.36 per cent), Assam (0.35 per cent), Madhya Pradesh (0.30 per cent) and Odisha (0.30 per cent).

"Since the antibodies generated by these vaccines are likely to last for 12-18 months, this expenditure would be a recurring expenditure on union and state budgets," it said. "However, many states such as Kerala, Chhattisgarh, Bihar and Madhya Pradesh have already announced that the government will bear the cost of vaccination. Vaccinations by large corporate groups will reduce pressure on the state/central budget."

Ind-Ra believes that 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 is too small an amount.

"However, more than the money spent, the critical factor would be how soon the desired level of vaccination can be achieved.

"Therefore, the decision to allow the restricted emergency use of Russian vaccine Sputnik-V and other vaccines approved by the US, EU and WHO is another step in the right direction. This will only accelerate the vaccination effort in the country. The first batch of Sputnik V is expected to be delivered to India by April-end," it added.