Should Vaccines Be Free For Everyone In India?

Trigger Warning: COVID Death

The second wave of coronavirus has wreaked havoc in India, with more than 3.3 lakh new cases, a record highest in the world, and 2000 deaths. This has been coupled with a lack of oxygen, beds, medicine, and testing facilities all over India, along with an apathetic government, with many, including hospitals running out of resources, having to turn to social media to plead and source supplies.

It goes without saying that the severity of this situation is much beyond numbers, as families are torn apart. Talking to Reuters, Jitender Singh Shunty of the Shaheed Bhagat Singh Sewa Dal was quoted as saying, “No one in Delhi would have ever witnessed such a scene. Children who were 5 years old, 15 years old, 25 years old are being cremated. Newlyweds are being cremated. It’s difficult to watch.”

This one statement sums up the pain all over India, with no one escaping the wrath of COVID.

India’s vaccination drive has also been lacklustre. As of April 20th, around 127 million doses have been administered, out of which only 17 million people have received both doses in the last 4 months. Against this backdrop, the Indian government opened up the vaccines to the free market, allowing private enterprises to sell at pre-declared rates. It also said that it is the responsibility of the states to procure and vaccinate their respective populations and that vaccinations would be open to those above 18 from May 1st.

With this, scenario, Adar Poonawalla, CEO of Serum, who has been producing the majority of vaccines along with Bharat Biotech, priced the vaccines for the state and centre at Rs.400 per dose. The price for vaccine procurement for private hospitals was set at Rs. 600 per dose. The prices of foreign vaccines are even higher, going up to more than 1500 a dose for US vaccines.

The Lingering Question: Should Vaccines Be Free In India?

Getting the most basic argument of your average privileged free-market capitalist of “400 is toh affordable na” out of the way: No, 400 rupees for a vaccine is not affordable or cheap for a lot of Indians. This argument warrants nothing more than a one-line answer.

However, the purpose of this article is to not sound like an angry socialist, though I am both those things. It is clear to see that private healthcare and the laissez-faire attitude of the government towards the public sector has failed the country, and the effects of capitalism are clear to see.

While one can write pages and pages about this, the fact remains that India is a capitalist country at this moment, therefore the argument that vaccines would have been free if India leaned towards socialism is theoretical for now.

What I am going to illustrate is the fact that under the present conditions, India still should be providing vaccines for free. 

The Economics Of Vaccine Pricing

Adar Poonawalla’s Serum is selling the first 110 million doses of the vaccine to the government at 150 rupees under the current contract, after which the numbers quoted above will be the price. Poonawalla has stated that the 150 rupee price only gives the company a normal profit.

So, what is normal profit? Normal profit, in the economic sense, refers to the firm making enough revenue to cover the costs and remain competitive. The argument that many will hear for the price rise to 400 is that this is the only way Serum can scale up production, which is required to meet the current demand.

And hence, a private capitalist enterprise like Serum won’t invest in scaling up vaccine production as this will lead to insurmountable losses for Serum. It can only do so when it is making more than normal profits.

Here, Serum’s actions are not the issue, but the fault lies in the government for not investing in Serum or any vaccine-producing PSU to scale up its production capacities before the vaccination drive, so more vaccines could have been produced right now. (With the current rate being 70 million vaccines produced per month).

On April 19th, 2021, reports emerged that the Government will likely grant Serum 3000 Crores to increase vaccine manufacturing efficacy. While this number is not too little, it could very well be too late. It will take months to construct, buy, and install new facilities to improve efficacy, till which point the vaccine production and distribution will be slow and lag.

The BJP should have made these decisions in late 2020, and also provided COVID vaccine-making capacities to the 20 public manufacturing facilities in India with this ability. The mix of capitalism, over-dependence on two private producers, and a lack of investment have necessitated such a price increase. 

The Indian government also did not make any advance orders for vaccines, which would have boosted availability and reduced the current shortage. The first vaccine order was in the first week of January for around 16 million doses. On the other hand, the USA had booked 400 million doses by August 2020 (before the vaccine even got approval), and the EU had booked 800 million doses by November 2020.

Foresight and planning do not seem to be the forte of the ruling party unless the matter relates to election campaigning.

So, Why Should Vaccines Be Free?

The economic reasoning behind Serum’s pricing is what is expected in a capitalist society, but vaccines should still be free. One can argue that in the current situation India is facing, a vaccine should be under the right to life. The government’s decision to put the onus of vaccinating citizens on the state is simply the BJP shirking away from yet another responsibility.

However, one cannot say that the BJP is forcing this responsibility on the states. Delhi’s Arvind Kejriwal has asked for more control and changes to the centre’s vaccine policy previously. The medical profession is also in the concurrent list, which means it is in the ambit of both the state and centre. There have also been recommendations for the right to health to be on the concurrent list in light of the pandemic.

The sin of the centre comes in its decision to also put the onus of buying the vaccines on the state. With diminishing revenues and some states poorer than others, this system is bound to fail. The supply chain is also not at the level to cater to these demands, as illustrated above.

The Centre should be the one paying for the vaccines and then distributing them to the states based on the population and severity of the pandemic in the area. After which, the onus should be on the state to vaccinate its people.

Why The States Cannot Pay

As of now, Kerala, UP, Assam, MP, Bihar, Chhattisgarh, and Tamil Nadu have said that they will provide vaccines for free. Taking the example of UP, the state is targeting a fiscal deficit of 90,370 crores this financial year, the cost of vaccinating every 18-45 year old in UP twice will be 8000 crores, not counting transportation and labour costs. This is a huge strain for any cash-strapped state economy.

Professor R Ramakumar from Tata Institute Of Social Sciences and a member of the Kerala State Planning Board pointed out, “Basically, the GoI has withdrawn itself from any commitment to ensure vaccines to States. It created a vaccine shortage over the last 4 months but is now passing the buck to the States by asking them to purchase the vaccines directly from the manufacturers.

So, if there is a shortage of vaccines from May 1, the GoI will simply say that the States are responsible. The role of GoI will now be limited to the vaccination of the first 30 crore vulnerable sections, who get the vaccine free. Rest will have to pay at a substantially higher price than at present. 

This is a highly regressive policy, which needs to be opposed by the States. It will inflict a serious cash burden on the State finances. It will lead to a rise in vaccine prices. It will allow the GoI to use the manufacturer-State government bargaining to hide its failures in planning for vaccines. It is essentially a gift to the private vaccine makers, with the attendant financial burden seamlessly passed on to the citizens.”

If A Billion Vaccines Were Available Right Now, Could The Centre Pay For It?

Even though some states have said that they will give the vaccine free of cost, it will lead to massive losses if they pay for it. The revenue of the states is too low. Adding onto the state’s predicament, GST dues have not been cleared in many states. One needs to ask mathematically- could the government pay for 2 billion doses?

Since one dose costs 400 rupees and assuming 100 rupees as other costs, 1 billion vaccines would cost 50,000 crores. To put this in perspective, the government is spending 20,000 crores on the Centra Vista Project, a project whose construction is still going on. It is very much possible for the central government to deprioritise projects and fund free vaccinations, especially considering it will buy all billion doses over a period of time, and those in privileged positions could fund their own vaccinations. 

The centre has not done this. It has passed it onto the states, in another effort to clean the blood off its hands.

In the current predicament, only 8 states make up 60% of the vaccines administered at this moment. While apps like Cowin have ensured that people can easily register for vaccines, it doesn’t account for those in remote areas, without internet access, or without the ability to register.

India’s vaccine preparedness has been very poor, and with the government’s current policies, improvement seems unlikely.

Featured image is for representational purposes only.