State govts may use bank guarantees for Covid-19 vaccine: Report

Several state governments are in talks with pharmaceutical companies who are manufacturing potential Covid-19 vaccines. According to a report by Business Standard, the Modi government has advised the state governments to "explore using bank guarantees to finance the cost of buying Covid-19 vaccines."

DH couldn't independently verify the report.

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The guarantees will support the state governments by providing them with an option to pay the cost of the vaccines over more than one financial year, the report stated. It also noted that as the states are in charge of the vaccination drive instead of the Centre, the financial negotiations will likely be more 'expedient' and "the companies will not be left with just empty promises from government bodies."

According to recent estimates by the GAVI vaccines alliance, India will have to spend $1.4 billion to $1.8 billion in the first phase of a coronavirus vaccination programme, even after getting support under the COVAX global vaccine-sharing scheme.

Also read: India may need to spend $1.8 billion on Covid-19 vaccines in first phase, documents show

How will the bank guarantees work?

Under the guarantee, the state governments will sign a contract with the pharma companies, "along with a slim upfront payment". According to the report, it is expected that "states will also write in clauses that the final sum payable shall be decided based on the number of shots that are actually administered to the population of the state."

Representatives of pharmaceutical companies confirmed the negotiation talks but said it was too early to finalise the details. “Only if there is an advance from the government, then the bank guarantee route is fine. Nothing has been concluded,” another spokesperson told the publication.

India, which has the world's second-highest caseload of coronavirus behind the United States, plans to inoculate 300 million people over the next six to eight months, likely with vaccines from AstraZeneca, Russia's Sputnik, Zydus Cadila and India's own Bharat Biotech.

(With agency inputs)