How will Budget 2021 fund India’s ambitious and costly Covid-19 vaccine programme?

India’s Union Budget, which will be announced on February 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 January 3, and the vaccination drive began on January 16.

As part of the first phase of this inoculation, the government has procured 1.1 crore doses of Serum Institute of India’s Covishield, manufactured from the master seed of the Oxford-AstraZeneca vaccine. It has also bought 55 lakh 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 3 crore 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 6 crore 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 programme, the central government had announced a stimulus package of Rs 20-lakh crore in May 2020.

In this context, funding a vaccination drive for 130 crore people could be like looking for change under the sofa cushions.

The cost of Covid-19 vaccines

The government has negotiated a price of Rs 200 per dose for Serum Institute of India’s Covishield. For Covaxin, the government will pay Bharat Biotech Rs 295 per dose. But given that the company is offering the first 16.5 lakh doses free of cost, the cost for 55 lakh shots comes down to Rs 206 per dose.

Even at the lower end of the spectrum, 6 crore doses would cost the government Rs 1,200 crore for just the first 3 crore 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 27 crore 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 (Rs 10,248 crore and Rs 13,176 crore) for the vaccine initiative for 30 crore people, Reuters had reported.

For context, during budget 2020, the total healthcare budget announced by Finance Minister Nirmala Sitharaman was Rs 69,000 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 United States, where healthcare is largely private, is providing the Covid-19 vaccine for free,” said 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 said.

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. Serum Institute of India’s CEO Adar Poonawalla has estimated that the Covishield vaccine could be available in the private market for Rs 1,000 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 said.

But given the limited number of vaccines currently available both at Bharat Biotech and Serum Institute of India, 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,” he said. “This will lead to inequity.”

This article first appeared on Quartz.