Centre’s healthcare budget may need 50% revision for Covid vaccination drive

As the country gets ready to vaccinate the population against the Covid-19 virus, the Centre will need to set aside a substantial amount to finance this. Healthcare allocation in the country has been quite low as a percentage of GDP, with the bulk of facilities being funded by private players. The Finance Minister will need to take steps to address the deficiency in the healthcare budget besides providing for the vaccination cost.

How much will vaccinating the entire population cost the exchequer?

While the official numbers are not out yet, Serum Institute of India has indicated that it will supply the Covid vaccine to the Centre at $3 per dose, which works out to roughly ₹440 for the prescribed two doses. Bharat Biotech has indicated the cost of two doses at ₹350.

Now, given our population of around 135 crore, vaccinating the entire nation at the Centre’s expense will result in an outgo of ₹59,488 crore if Serum Institute’s vaccine is used, and ₹47,230 crore if Bharat Biotech’s is used.

Who may opt out

But the entire population may not have to be vaccinated. One, not all may want it. An Ipsos survey in November 2020 for the World Economic Forum showed that 87 per cent in India were agreeable to getting vaccinated.

But this number could have declined in the past month, with falling active Covid cases and the controversy over the alleged lack of transparency in the vaccine approval process. The percentage of people willing to get vaccinated could therefore be lower now, say 80 per cent.

Two, of these, many may opt to vaccinate themselves at private clinics, at a higher rate. Serum Institute has indicated that it will sell its vaccine at ₹700-800 to private medical facilities — this will be quite affordable for at least 30 per cent of the population. Given the long waiting period for the government vaccine and the risk of exposure to the virus in government facilities, many may prefer the private route, thus reducing the burden on the Budget.

Budgetary pangs

Thus, of the total population of 135 crore, only around 75 crore will probably need the vaccine from the government. The extra budgetary allocation for vaccination could therefore be ₹26,000-35,000 crore, including the logistics and other vaccination expenditure.

The Centre’s Budget allocation to health and family welfare was ₹65,011 crore in FY21. The expense on the Covid vaccine is likely to increase the allocation for FY22 by at around 50 per cent.

Of concern is the fact that the expenditure on health and family welfare accounts for just 2.1 per cent of the total. This is resulting in inadequate healthcare facilities. Hospital beds per 1,000 population in India is just 20, though States/UTs such as Delhi, Karnataka, Kerala and Telangana have more beds than the national average.

The combined expenditure of the Centre and the States towards healthcare is around 1 per cent of the GDP, resulting in most people going to private facilities.

A global comparison of governments’ share in total healthcare expenditure shows the Indian government has been among the least spenders in this space.

With Covid-19 moving the spotlight on these gaps, they need to be addressed in the future Budgets.