A Slow Learner’s Difficulty with the New Vaccine Policy

`I only took the regular course.'
`What was that?' inquired Alice.
`Reeling and Writhing, of course, to begin with,' the Mock Turtle replied; `and then the different branches of Arithmetic—Ambition, Distraction, Uglification, and Derision.'

– Lewis Carroll: Alice in Wonderland

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The following are elements of the new Covid-19 vaccine procurement and pricing policy recently announced by the Prime Minister of India in a speech to the nation, as reported by the Indian Express on June 7, 2021:

1. “Prime Minister Narendra Modi on Monday announced that the government would revert to a system of centralised procurement of Covid-19 vaccines wherein it will provide free shots to states for inoculation of all above the age of 18 from June 21. [Emphasis added.]

2. “The central government will be responsible for procuring vaccine doses and distributing them to the states. This essentially means that the central government will buy 75 per cent of the total vaccine production from vaccine manufacturers and the state governments will not have to spend anything on vaccines.”

3. “The private sector hospitals will be able to purchase the rest 25 per cent of the vaccines being made in the country. Those willing to pay for the vaccine doses can take the jab at private hospitals and health centres.”

Additionally, according to a report in The Hindu of June 9, 2021:

4. “The maximum price chargeable for Covishield is Rs.780, for Covaxin Rs.1,410 and for Sputnik V Rs.1,145, the Union Health Ministry said on Tuesday [June 8].”

Since everybody cannot be expected to be as bright as the Prime Minister’s speechwriters or his policy advisers, one hopes one will be excused for not being able to quite understand all of the pronouncements made in the new policy package. Hence these admittedly bumbling questions in a humble quest for enlightenment, preceded by some background material leading up to the queries:

India’s 18+ population—let us call this the target population for vaccination—is of the order of around 95 crore. From items 2 and 3 of the elements of the new vaccine policy presented above, it would appear that the central government will not bear the cost of vaccinating 25% of the target population, which is about 24 crore (one-fourth of the 18+ population of 95 crore). Assuming private hospitals will charge at least Rs.780 for a single jab (this is the Covishield price mentioned in item 4 above) and given that two doses are required for each person, the total cost of receiving vaccination from private hospitals for 25 per cent of the target population would be a minimum of Rs. 37,440 crore (Rs. 1560 per person 24 crore persons), or approximately Rs. 0.37 lakh crore.

From earlier pronouncements made by the central government, it appears it will procure vaccine at a price of Rs.150 per dose, or Rs.300 per person; the central government’s coverage is 75 per cent of the 95 crore target population, that is (approximately), 71 crore persons, making for a total vaccine bill of Rs. 21,300 crore (Rs.300 per person 71 crore persons), or approximately Rs. 0.21 lakh crore.

If all of the above is correct, then one must be pardoned for raising the following two queries, which must surely be a source of perplexity to very many other citizens, too, of this country:

Q1. Why does it make any sense at all that private citizens (paying for the equivalent of one-third the amount of vaccine procured by the central government) are expected to foot a bill which is 1.76 times the Central Government’s bill (Rs.0.37 lakh crore/ Rs.0.21 lakh crore = 1.76)?

Q2. If only 75% of the target population is exempt from paying for its vaccination, then what does it mean to speak of the government providing “…free shots…for inoculation of all above the age of 18”?

Is it some arcane aspect of advanced Vedic Mathematics that ¾ = 1?

- S. Subramanian (The author is an economist who lives and works in Chennai)