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EXCLUSIVE | Budget 2021 may allot up to Rs 80,000 crore for Covid-related spend

Additionally, the Narendra Modi government is learnt to have accepted the recommendations of the Fifteenth Finance Commission (15th FC) on the health sector. The recommendations, which will be made public along with the budget, likely include nearly doubling India’s combined public health expenditure as percentage of GDP, and creating a dedicated central cadre of medical professionals.

December 10, 2020 / 12:30 PM IST

A top government official told Moneycontrol that the provisioning could be as high as Rs 80,000 crore. This will just be from the centre, with states and the private sector also budgeting their own expenditure as India prepares for a vaccination drive that could be the largest in the world.

Additionally, the Modi government is learnt to have accepted the recommendations of the Fifteenth Finance Commission (15th FC) on the health sector. The recommendations, which will be made public along with the budget, likely include nearly doubling India’s combined public health expenditure as percentage of GDP, and creating a dedicated central cadre of medical professionals.

Finance Minister Nirmala Sitharaman is expected to present the Union Budget on February 1, 2021.

“There have been discussions over provisioning one-time expenditure in the coming year. We believe a bulk of spending on vaccines, from procuring to storing to transporting, distributing and inoculating, will happen in 2021-22,” said the official, who is aware of deliberations around the budget.

“While the private sector has a big role to play, and India’s pharmaceutical manufacturing capacity is second to none, the central and state governments will do the heavy lifting procurement onwards. We have to prepare a mechanism to ensure last mile delivery of the vaccines,” the person said.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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Three leading coronavirus vaccine developers -- Pfizer Inc, AstraZeneca and Bharat Biotech -- have applied for emergency use authorization in India, which has the world's second highest number of coronavirus cases.

Prime Minister Narendra Modi has said that the first dozes of the vaccine could be available within weeks, but added that cold storage and logistics capacity will have to be ramped up.

The central government has already asked the states to identify those who will be vaccinated on a priority basis, including frontline healthcare and essential workers, and the elderly people.

Public Healthcare

As reported by Moneycontrol earlier, the 15th FC has likely recommended that India’s combined public health expenditure be increased to 2.5 percent of gross domestic product by 2023-24. As a percentage of GDP, this is nearly double of 1.26 percent health outlay by central and state governments in 2019-20, as per an assessment by Niti Aayog.

The commission has also pitched for a separate central cadre for doctors and medical professionals, to combat the issue of shortage of essential personnel. These recommendations are learnt to have been accepted and may be announced in the budget, the official quoted above said.

“Beyond the vaccination programme, there are gaps to be filled in our public healthcare system, which was exposed by the pandemic. That is a more medium-term process,” the official said.

India ranks 184th out of 191 nations in terms of healthcare spending as percentage of GDP, as per the World Health Organization.

The one-time provisioning and additional expenditure on healthcare will impact the centre’s fiscal deficit. However, as Sitharaman has made it clear publicly, these considerations take a back seat compared to the need to ramp up public spending.

As of December 12, India has the second highest number of confirmed COVID-19 cases in the world at 9.8 million, with 141,772 deaths. Of the confirmed cases, 372,293 are active cases.
Arup Roychoudhury
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