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How much will the Rs 35,000 crore allocation for Covid-19 vaccines help?

While the pandemic has led to improvement in health surveillance outlays in the Union Budget, what remains to be seen is how the allocation will be spent—particularly in the wake of vaccine diplomacy—and how much the states will have to do

Divya J Shekhar
Published: Feb 1, 2021 07:00:46 PM IST
Updated: Feb 1, 2021 07:55:59 PM IST

How much will the Rs 35,000 crore allocation for Covid-19 vaccines help?A medical worker inoculates a colleague with a Covid-19 coronavirus vaccine at the Cooper Hospital, Mumbai
Image: Shutterstock


Finance Minister Nirmala Sitharaman earmarked Rs35,000 crore toward Covid-19 vaccines in the Union Budget 2021 on February 1. “I am committed to provide further funds if required,” she said in her speech. She also announced that two more vaccines will be rolled out soon. At present, India has granted emergency use authorisation for two vaccines: Covaxin, developed by Hyderabad-based Bharat Biotech, and Covishield, manufactured by Serum Institute of India in Pune.  

“India has fared well in keeping the Covid-19 death rate and active case rate one of the lowest in the world, and [is] also emerging as a supplier of vaccines to many countries. With provisions for vaccination being made available to the population at large at the earliest, the country can move beyond the pandemic to focus on the future,” says Dr Azad Moopen, founder chairman and managing director, Aster DM Healthcare. 

Experts point out that the fear of the pandemic and the way it ravaged the economy has resulted in increased outlays towards health care prevention and surveillance in India. This includes strengthening the National Centre for Disease Control (NCDC), its five regional branches and 20 metropolitan health surveillance units, which will be done over the next six years as part of the Rs64,180 crore centrally-sponsored PM Atmanirbhar Swasth Bharat Yojana. “This [scheme] will develop capacities of primary, secondary, and tertiary care health systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases,” the finance minister said in her speech. 

“While the provision of Rs35,000 crore for Covid-19 vaccine and focus on disease control and surveillance will help cope with the immediate needs brought forth by the pandemic, the setting up of [four regional] National Institutes of Virology, and integrated health labs, an updated health information portal will all prepare us for future such eventualities,” says Charu Sehgal, partner and leader, life sciences and healthcare at Deloitte India. 

Apart from Covaxin and Covishield, other vaccine candidates that are in various stages of clinical trials in India include the ZyCov-D by Zydus Cadila, which has received a nod from the regulator to conduct Phase-3 trials of its indigenous DNA vaccine; Russian vaccine candidate Sputnik-V manufactured by Dr Reddy's Laboratories that is conducting its Phase 2&3 trials; while vaccine candidates by Pune-based Genova and Hyderabad-based Biological E are each in Phase 1 / 2 trials. 

At the time of writing, India had managed to inoculate around 3 million health care and frontline workers since launching its nationwide vaccination drive on January 16. 

Krishna Ella, chairman and managing director of Bharat Biotech, said in a statement that the Rs35,000 crore allocation to vaccines signals a shift to preventive health care, a validation of the fact that vaccines are the most cost-effective health care interventions. “The finance minister's commitment [toward] providing more funds in order to contain the coronavirus pandemic spread in the country and provide an effective, smooth path for the vaccination scheme will help contain, and lead our nation towards accomplishing a Covid-19 disease-free Bharat,” he said.

According to a Morgan Stanley pre-Budget report dated January 17, the cost to the government for procuring Covishield has been Rs200 per dose for the first 100 million doses, after which there will be a tender process. For Covaxin, the price is Rs295 per dose (excluding taxes) for 3.85 million while 1.65 million doses are being given free, bringing down the effective price to about Rs206 per dose. “The government is thus paying Rs2.3 billion for Covishield while it is shelling out Rs1.6 billion for Covaxin,” the report says. 

The government has targeted vaccination of around 270 million senior citizens and people with comorbidities by July. “It remains to be seen what is the share of vaccination expenditure the state governments will have to bear,” says Srinath Reddy, president, Public Health Foundation of India (PHFI). 

According to him, one question that will have to be asked at some point is to what extent this budgetary allocation will take vaccine diplomacy into consideration. “We are giving vaccines to other countries, some of them in soft diplomacy, free of cost. So how much of the additional cost for Covid-19 vaccines will be only for India and, how much will be distributed to the states, how much will go abroad, all this will have to be sorted out. As of now, the government has indicated that they will fund vaccines more,” says Reddy. 

“The allocation around funding for Covid-19 vaccines is welcome as this will hopefully help in supporting further roll out of the current vaccination program into our priority population segments, and can also help in negotiating better prices from manufacturers,” says Anant Bhan, a global health, bioethics and health policy researcher. “However, we also need to focus on strengthening health systems, which will enable us to prepare and respond better to health crises such as a pandemic, and also to be able to support activities like vaccination.”

Hitesh Sharma, tax partner and life science sector leader, EY India, had said that there was an expectation that the government will increase the scope of the Pradhan Mantri Jan Arogya Yojana [PMJAY, or Ayushman Bharat], which currently covers close to 50 crore people with an insurance cover of Rs5 lakh per family. Pre-Budget, he had said that the government could look at expanding the Rs5 lakh limit taking into account vaccination expenses so that people have money left to take care of other critical illnesses.

“The government has not increased the limits of the insurance scheme, but they have made a clear statement of financing vaccination [for low-income and priority groups]. Even if they buy two doses of the vaccine at Rs400, with the current allocation, they could easily cover vaccination for more than 70 crore [700 million] people,” he says. “Hopefully, the states should also come forward, because health is, after all, a state subject.”

Apart from Covid-19 vaccines, the finance minister also announced that the pneumococcal vaccine, developed indigenously by the Serum Institute of India and currently limited to five states, will be rolled out across the country. “This will avert more than 50,000 child deaths annually,” she said. 

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