The reality of Modi govt’s vaccine funding: Rs 35,000 cr for states, zero for Centre

The reality of Modi govt’s vaccine funding: Rs 35,000 cr for states, zero for Centre

Budget documents for 2021-22 show govt didn't allocate any funds for vaccine expenditure by the Centre. However, it has spent Rs 2,520 crore so far this fiscal for vaccine procurement.

File photo | A medic administers the first dose of Covaxin to a frontline worker, in New Delhi | PTI

File photo | A medic administers the first dose of Covaxin to a frontline worker, in New Delhi | PTI

New Delhi: The Narendra Modi government’s Union Budget 2021-22 appears to have made no provision for expenditure on Covid-19 vaccination by the central government. The documents show an allocation of Rs 35,000 crore towards vaccines but the amount is to be transferred to the states to support the vaccination drive.

Citing this, the Congress has questioned the Modi government over its handling of the pandemic and the vaccination drive.

“There was ZERO provision for Covid vaccination in this year’s expenditure of the Centre…The ₹35,000 cr budgeted was ‘loans/grants’ to all the States for vaccination,” Praveen Chakravarty, political economist and chairperson, data analytics, at the Indian National Congress posted on Twitter.

In a previous tweet, he had also pointed out that the central government had absolved itself and shifted vaccine responsibility to the states in the budget.

“This explains the vaccine pricing mess,” he said.

The Congress party’s offensive comes at a time India is seeing a record 4 lakh new cases every day with daily deaths at more than 4,000, according to official figures.

The rapid spread of the disease and slow pace of the vaccination drive have put the Modi government at the receiving end of criticism. Its decision to transfer the burden of vaccinating Indians in the 18-44 years age group to the states amid a vaccine shortage and without regulating vaccine prices has also invited a lot of criticism from states.

Also read: Still playing the book-vaccine-slot game on CoWin? That’s because there’s a shortage of doses

What the budget documents show

Finance Minister Nirmala Sitharaman, in her budget speech on 1 February, had said: “I have provided Rs 35,000 crores for Covid-19 vaccine in BE 2021-22. I am committed to provide further funds if required.”

The finance ministry, in its statement of major variations in expenditure between the revised estimate of 2020-21 and the budget estimate of 2021-22, had also said one of the reasons for an increase in expenditure was provision for financial assistance to meet the expenditure on Covid-19 vaccination.

A close look at the budget documents shows that the Rs 35,000 crore allocation for 2021-22 for vaccines is in the form of transfers to states. At the same time, in the 2020-21 budget, the Covid 19 vaccination allocation of Rs 360 crore for healthcare and frontline workers is under the Central sector scheme of the National Health Mission.

In an interview after the presentation of the Union Budget, Expenditure Secretary T.V. Somanathan had said the allocation would be sufficient to cover the full cost of vaccinating 50 crore Indians.

At that time, the price of the vaccine was fixed at Rs 150 per dose in case of both Covishield and Covaxin — the two domestically manufactured vaccines approved by India. However, this price has shot up significantly with the government allowing manufacturers to fix the prices for sales to state governments and private hospitals.

For procurement by states, the price of Covishied is Rs 300 per dose and that of Covaxin is Rs 400 per dose.

The finance ministry did not respond to an email sent late Sunday night seeking a comment on this. This report will be updated when a response is received.

The Modi government has so far paid Rs 3,639.67 crore to the Serum Institute of India (SII), which is manufacturing Covishield, for 26.6 crore doses of the vaccine and Rs 1,104 crore to Bharat Biotech (BB) for 8 crore Covaxin doses. This includes advance payment of Rs 1,732.5 crore and Rs 787.5 crore made to SII and Bharat Biotech, respectively, on 28 April, Anurag Thakur, Minister of State for Finance tweeted late last night.

Defending the pace of India’s vaccination, he said it is the world’s largest and fastest vaccination drive with 15 crore people vaccinated in 103 days.

Taking into account these advance payments, the central government has spent a total of Rs 2,520 crore in 2021-22 for vaccine procurement for which it will have to make allocations in its budget during the year.

Also read: Young India wants Covid vaccines, but CoWIN just won’t let us win

Criticism from states

Opposition-ruled states such as Kerala, Telangana and West Bengal have been vocal about vaccine shortage, the Centre transferring the entire burden of vaccinating the younger population to the states, and the lack of pricing controls on vaccine manufacturers.

West Bengal Chief Minister Mamata Banerjee had said the Centre’s vaccine pricing policy is detrimental to the interests of the states.

Kerala Finance Minister Thomas Isaac had said the Modi government has abdicated its responsibility of a universal vaccination.

K.T. Rama Rao, Telangana’s industry minister had questioned why there are two different vaccine prices for the central government and states.

However, a public finance expert pointed out that since the eventual vaccination is being administered by the states, the budget classification does not really matter.

N.R. Bhanumurthy, Vice-Chancellor at Bengaluru’s Dr B.R. Ambedkar School of Economics university, said even when the central government is procuring the vaccines, these are being given to the states.

“The budget allocation of Rs 35,000 crore can either be a cash transfer or a kind transfer to the states from the central government. So either the central government can procure the vaccines and give to the states or the states can directly buy it from the manufacturers and distribute,” he said.

The central government’s initial plan may have been to procure from companies and distribute it to the states but with states demanding a free hand in the matter, they were allowed to buy the vaccine, he added.

Finance ministry’s response 

Though the finance ministry did not respond to ThePrint’s email requesting for a comment, it later said in a statement the provision of Rs 35,000 crore has been shown under ‘demand for grants’ titled ‘Transfers’ to states, and that the central government is procuring vaccines using these funds.

“Vaccines have actually been, and are being, procured by and paid for by the Centre through this head of account,” it said, adding that the use of this ‘demand for grants’ has several administrative advantages.

“Firstly, because expenditure on vaccine is one-off expenditure outside the normal Centrally Sponsored Schemes of the Health Ministry, separate funding ensures easy monitoring and management of these funds. Also, this grant is exempted from the quarterly expenditure control restrictions applicable to other demands. This helps to ensure that there is no hindrance in the vaccination programme,” the ministry said in the statement.

“Vaccines are passed on to the States as grants in kind and the actual administration of vaccines is being done by States. Further, there is enough administrative flexibility to change the nature of the scheme between grants in kind and other forms of grants,” it added.

This report has been updated to include details from the statement issued by the finance ministry in response to it.

(Edited by Sanghamitra Mazumdar)

Also read: Punjab waits on 1 lakh doses to kick off 18+ vaccinations, but needs 2.63 cr more