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With change in vaccine procurement policy, budgetary allocation likely to see tweaks

The Centre’s Budgetary allocation of Rs 35,000 crore for Covid-19 vaccine in 2021-22 is coming under question after it decided to procure only 50 per cent of the total supply, leaving the remaining to be purchased by states and private channels at market prices. In determining the Budgetary allocation for vaccine, the Finance Ministry initially estimated requirement of a total of 290 crore vaccine shots for the entire population, after taking into account two shots per individual and also the vaccine that is wasted during the entire process.

Now, with the Centre procuring 50 per cent of the total requirements, at a price of Rs 150 per jab, its total cost for 145 crore shots could come to Rs 21,750 crore. However, this does not take into account any booster shots that may be required and any increase in price of vaccines for the Central government as well. Government officials said they are not yet clear whether there will be any savings from the Budgetary allocations on vaccines even after changes in the government policy. In fact, the fund requirement, they said, could be even higher than Rs 35,000 crore as the situation evolves, including the possibility of providing booster doses, vaccine prices increase and wastage rates.

“We arrived at this Budgetary allocation after detailed study and examination. See, we have about 135 crore people, and with two vaccine shots required for each one and taking the vaccine wastage into account, our internal understanding is that nearly 290 crore vaccine shots will be required. Even if the central government procures 50 per cent of the required vaccines, and we don’t know yet if booster shots will be required, they may be needed, the costs involved may even be higher than Rs 35,000 crore,” sources in the Finance Ministry said.

“One also needs to keep in mind price escalation that we may need to factor. We have to see as things evolve. The FM (Finance Minister Nirmala Sitharaman) has said the government is committed to providing more funds if needed for the vaccines. Whether there will be any savings on account of procurements by states and private parties, we are not sure. We are working to ensure successful vaccination for all and provide funds for any booster shots that may be required as well. But, we believe after reasonable internal assessment that vaccine procurement costs will exceed Rs 35,000 crore, keeping these factors in mind,” they said.

As per new policy, from May 1, the vaccine supply are divided into two baskets: 50 per cent for the Centre, and 50 per cent for the open market. Through the second — non-government of India — channel, state governments, private hospitals, and industries that have facilities to administer the vaccine, will be able to procure doses directly from manufacturers. From Saturday in order to vaccinate anyone, including those in the priority group of age 45 years or older, private hospitals will have to procure supplies directly from the open market.

Possible requirement of booster shots, price increases and wastage are three key elements that impact the Budgetary requirements of the government for the inoculation drive. The country’s overall wastage rates of Covid-19 vaccine had hovered around 13.5 percent in early March, before coming down to around 6.5 percent in April. But the wastage of vaccines within states also varies.

In April, India witnessed the highest demand for vaccines in a month with 90.50 million doses administered by 6.30 pm on Friday, compared to 50.60 million doses in March, 10.05 million in February and 3.71 million in January, according to the Ministry of Health and Family Welfare. The Indian Express

 

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