Free vaccines, food to cost India an additional Rs 80,000 crore

By Siddhartha Singh,

India will need to spend an additional Rs 80,000 crore ($11 billion) to provide free vaccines and food to millions of people devastated by the deadly coronavirus wave, people with knowledge of the matter said.

The government will earmark an additional Rs 70,000 crore for providing food to the poor and other eligible groups until November, said the people, who asked not to be identified as the numbers aren’t public. The administration will need an extra Rs 10,000 crore to provide free vaccinations, they said.

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Prime Minister Narendra Modi agreed Monday to provide free inoculations, reversing a policy where states ended up competing for supplies for certain age categories, leading to severe shortages. His administration also has been criticised for its handling of the second wave of the virus, which has killed thousands of people in India.

In an address on national television, Modi said all Indians above age 18 can be vaccinated for free starting June 21, to speed up the inoculation drive.

The government may not have to tap the bond market for the funds, the people familiar said, citing the Rs 99,120 crore dividend the government received from the central bank and expected inflows from asset sales. With the extra money, the government will end up spending a total of Rs 1.3 lakh crore on providing food, the people said, and has set aside Rs 35,000 core for vaccinations in the budget.

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A finance ministry spokesman declined to comment.

Even after accounting for the bumper dividend from the Reserve Bank of India and better growth numbers that should result in higher tax revenue, the “fiscal math will likely worsen,” said Madhavi Arora, an economist with Emkay Global Financial Services Ltd. in Mumbai. That’s because of higher payouts on food and fertiliser subsidies as well as for a rural jobs-guarantee program. There’s also a risk that the asset-divestment program could raise less money than anticipated.

“Amid various push and pull there is a likelihood of fiscal slippage, to the tune of around 0.5% from the initially budgeted 6.8% of gross domestic product,” she added, referring to the expected fiscal deficit.

India has administrated 23.2 crore doses since the world’s biggest vaccination drive began Jan. 16, with 3.4% of the population now fully immunised. At that pace, it will take another 22 months to cover 75% of the population, according to the Bloomberg Vaccination Tracker.

--With assistance from Anirban Nag.