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‘Vaccination cost at Rs 3.7L cr, lower than loss from likely lockdowns’

The total vaccination of the entire population of the country to tackle Covid-19 is estimated to cost Rs 3,70,000 crore, according to a State Bank of India (SBI) report.

By: ENS Economic Bureau | Mumbai |
May 22, 2021 6:19:06 am
However, this cost is an absolute must as even at the highest vaccine price, the total vaccination cost at Rs 3.7 lakh crore is much lower than revenue loss at Rs 5.5 lakh crore assuming lockdown for states end mostly by June, the report said.

The total vaccination of the entire population of the country to tackle Covid-19 is estimated to cost Rs 3,70,000 crore, according to a State Bank of India (SBI) report.

“If we construct simple scenarios with different price ranges — at $5, $10, $20, $30 and $40 — with the rupee-dollar exchange rate of 73, and assume that Centre gives 50 per cent of the vaccines for the states’ population, the vaccine expenditure for the rest 50 per cent for various Indian states would be in the range of Rs 20 crore for Sikkim (if the vaccine is procured at $5 per dose) and Rs 67,100 crore for Uttar Pradesh (if the vaccine is procured at $40 per dose),” SBI said in a research report.

However, these represent extreme scenarios and the cost for each state will lie somewhere in between, it added. “If we map this scenario analysis with the budgeted FY22 total expenditure of 20 major states, at the highest price point, the vaccine procurement is 16 per cent of the total expenditure for Bihar, 12 per cent for states like Uttar Pradesh and Jharkhand.”

However, this cost is an absolute must as even at the highest vaccine price, the total vaccination cost at Rs 3.7 lakh crore is much lower than revenue loss at Rs 5.5 lakh crore assuming lockdown for states end mostly by June, the report said.

Interestingly for some states, like UP and Bihar, the revenue loss is less than increase in expenditure at the highest price point, it said. Also, the budgeted capital expenditure of Rs 8.8 lakh crore could see a significant rollback to balance revenue loss, further exacerbating GDP loss. “Additionally, the payment though will be made in domestic rupee resources, it would possibly imply equivalent dollars from our reserves to make the payment! However, such payments could potentially trigger a renewed interest of capital flows into India as investors will look through the huge benefits of such mass vaccination,” SBI report said.

SBI said the second wave of Covid has been stabilising with declining 7-day moving average of daily new cases for the past few days, indicating the peak of the second wave is behind us. Furthermore, daily recovered cases are now higher than daily new cases and the gap between the two is much higher than what was observed during the first wave peak, it said.

However, the share of rural districts in new cases has increased from 45.5 per cent in end-April 2021 to 52.9 per cent as per the latest data. This is slightly lower than the peak of 53.7 per cent during the first wave. However, when compared to September 2020, the situation is marginally better in certain states like Andhra Pradesh, Bihar, Karnataka, Tamil Nadu, Uttarakhand and West Bengal where rural penetration was even higher at the time of first peak than what has been observed so far in May.

According to SBI, a point of worry is, however, the high test-positivity along with much lower number of tests witnessed in certain states like Goa, Karnataka, West Bengal, Himachal Pradesh, Rajasthan, Odisha among others. The extended lockdowns/restrictions are having huge negative impact on economic activity, particularly in May. The SBI Business activity index has dipped to 62.6 for the week ended May 17, 2021, the lowest since May 25, 2020.

“Additionally, if we look at the various stages of development, there are 15 vaccines approved for emergency use and 15 potential candidates in phase II/III or phase III stage of development and four others in the regulatory review stage,” it said. Against this backdrop, states in India are floating global tenders for procurement of vaccines. The Central government is also in talks with global manufacturers with RNA technology — Pfizer, Moderna and Janssen Pharmaceuticals — to supply coronavirus vaccines in the country. As per UNICEF data, of the 3.9 billion vaccine doses with RNA technology, 2.69 billion have been secured by other nations.

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