Covid-19: Cost of vaccinating the 18-44 population
So far, seven state governments have declared that they will provide free vaccines
On April 19, the Union government announced that vaccinations will open for everyone above the age of 18. While the Centre is providing free vaccination to those about 45, it indicated that people in the 18-44 age group will either have to get them from state governments or buy them from private hospitals. This means that unless state governments decide to supply the vaccines free of cost, people will have to pay to get them. So far, seven state governments have declared that they will provide free vaccines. To be sure, the Centre will continue to acquire vaccines, which may be used to vaccinate the 45-plus population or to supply to state governments.
1) So, how much will it cost to vaccinate India’s entire population between 18 and 44 years of age?
More clarity is needed on the procurement process and other important details. But answering this question requires clarity on the cost of vaccines. So far, only one of the vaccine manufacturers, Serum Institute of India (SII), which is making the Oxford/AstraZeneca vaccine (Covidshield in India) has declared its price – ₹400 per dose for state governments and ₹600 per dose for supply to private hospitals. Other vaccines, which include Covaxin made by Bharat Biotech, and those that will be imported or their Indian-made versions will be rolled out, could change the price in the days to come. Taking the SII price as the benchmark for now, vaccination people between 18 and 44 years of age could range anywhere between ₹47,500 crore to ₹71,500 crore, depending on whether the SII vaccine is procured at ?400 per dose or ?600 dose. Where does this number come from? The total population of 18-44-year-old age-group in India is expected to be 594.6 million, according to the report of the government’s Technical Group on Population Projections. This report also gives the statewise break-up of the 18-44 population. This number, when multiplied by ?800 or ₹1200 (for two doses of Covidshield) gives the total cost of ₹47,566 crore or ₹7,1349 crore. Uttar Pradesh, the state with the largest population of 18-44 year olds will have to spend between ₹7,970 crore to ₹11,960 crore for vaccinations. For smaller states such as Himachal Pradesh and Uttarakhand this number will be in the range of ₹400- ₹625 crore respectively.
2) What will be the possible fiscal burden on states?
The absolute cost of vaccination, while it is important, does not tell us about the fiscal burden on the states. In order to calculate this, it is useful to look at the vaccine cost (at ₹800 for two doses) as a share of the total spending of states. An HT analysis shows that the fiscal burden of vaccination, defined as cost of vaccination as a share of total budgeted spending of states, will vary in a big way across states. Among 21 states for which data is available in the Centre for Monitoring Indian Economy’s (CMIE) database and population projection report, Bihar will face the highest burden – 1.8% of total state spending in 2021-22. This number is the lowest in Himachal Pradesh, where the burden will be just 0.54% of the budgeted state spending. All state budget numbers are 2021-22 budget estimates except for Punjab and Andhra Pradesh where 2020-21 numbers have been used. The total cost of vaccination in India assuming everybody in the 18-44 age-groups was to use the state government supply would be ₹47,565.8 crore, or 26% of the total health spending of the states in 2020-21 as per CMIE data.
To be sure, the net cost per person for different governments will likely be lower than these estimates because some people might take the private route for vaccinating themselves and it is possible that some state governments ask some sections of the population to foot the bill for vaccination in part or full.
3) What is the affordability of vaccines in open market?
Since India does not release income data for its workers, the best way to answer this question is to use earnings estimates given in the latest Periodic Labour Force Survey (PLFS) data. These are 2018-19 figures, but HT has not adjusted them for inflation, given the uncertainty about the adverse impact of the pandemic on employment and earnings. According to PLFS, there were 356 million workers in India in 2018-19 in the current weekly status, or the status of employment during the week preceding the survey. Wage data is available only for this status. PLFS classifies workers into four categories: regular wage/salaried, self-employed, casual workers, and casual workers employed in public works such as MGNREGS. Among these four, regular wage salaried workers had the highest incomes, while the casual workers engaged in public works (about 1% of workers) had the lowest incomes. 22% of Indian workers are casual workers other than public works, who earn an average of ₹8,340 per month.
4) What does thismean for vaccine affordability?
It is to be expected that an earning member in a household might have to buy vaccines for more than one person in the household, as every member in the 18-44 year age-group might not be employed. According to PLFS, the work force participation rate in the 18-44 year age-group was 51.6% in 2018-19. This means that 48.4% of the population in this age-group is not working. An HT analysis of unit level PLFS data can help in finding out the actual burden of vaccinating people in the 18-44 year age-group by calculating the number of 18-44 year olds in that household and total household earnings irrespective of the age of the earning member. This exercise shows that an average Indian household will end up spending 24% of its monthly incomes on vaccinating its 18-44 members if it was to spend ₹1,200 for both doses. This headline number varies greatly across income class and states. For the bottom 20% of households, this burden will be 43% of their monthly incomes. For the top 20%, this number will be 12% of the household monthly income. The financial burden, as is to be expected, will be significantly higher in rural areas (31%) compared to urban areas (16%).
As in the case of the fiscal burden, the private cost of vaccinations will also burden households differently across states. Replicating the analysis used above at the state level, Uttar Pradesh, Chhattisgarh, Bihar, Odisha, and Jharkhand will have the highest burden while household in richer states will face a smaller burden.