The total cost of India’s vaccination drive could go up to Rs 3.7 lakh crore, with the cost of vaccine procurement exceeding potential revenue loss from lockdowns for populous states like Uttar Pradesh and Bihar, the report said.
“Poorer states with high populations would not be able to vaccinate themselves quickly. Meanwhile richer states may have to pay a much steeper price given the global oligopolistic market,” said Soumya Kanti Ghosh, SBI group chief economist, in the report.
Assuming the Centre provides 50% of the required vaccinations for the states, Sikkim would have to pay Rs 20 crore at a cost of $5 per vaccine.
At the upper end of the range of vaccine costs at $40 per shot, UP would have to pay Rs 67,100 crore while the figure worked out to 16% of Bihar’s total expenditure for FY22, SBI Research said.
While the final figure was likely to fall somewhere in between, the report emphasized that vaccine procurement was an absolute must considering the estimated revenue loss of Rs 5.5 lakh crore if lockdowns ended by June.
Additionally, states would face an inelastic supply curve for two months as a majority of the 22.2 billion global vaccine production capacity for 2021 was either already secured or committed to foreign governments, the report said.
India has secured only 28 million doses so far, according to UNICEF data, with another 2.14 billion doses committed in the pipeline for August-December.
State governments and municipalities like UP and the Brihanmumbai Municipal Corporation have had to extend global tenders and relax criterias after receiving no response even as more states including West Bengal and Bihar are considering floating similar tenders.
The Centre should follow the European Union template where a joint negotiation team of member nations negotiate with vaccine suppliers, the report said.
India has so far vaccinated 187 million people but the total vaccination per 100 population is still at 13.8, SBI Research said.