View: Logistics is likely to be the biggest problem in India’s vaccination drive

Now that science has delivered, the more mundane but critical matters of reaching the Covid vaccines from the factory gate to the upper arms of millions of Indians over the new year remains. There is also the question of funding this gargantuan exercise. A simple comparison would illustrate the enormity of the challenge. India already has a robust inoculation programme in place under its universal immunisation programme for children. The size of the Covid drive will be roughly five times that of the existing programme.

Hard numbers of vaccine prices are difficult to get. But news reports claim that the Pune-based Serum Institute of India, likely to be the largest vaccine supplier of its ‘Covishield’ vaccine, could sell it to the government at Rs 250-300 for a dose, or Rs 500-600 for the required double dose. I take this as a benchmark price. A December 2020
dipstick survey conducted by Federation of Indian Chambers of Commerce & Industry (Ficci) and Ernst & Young (EY) estimated the cost of vaccine administration (infrastructure, manpower, consumable costs, etc, but excluding the vaccine price and logistics) at Rs 200-300 for a double-dose. Assuming a conservative Rs 100 logistics cost, the total cost per individual works out to roughly Rs 800.

GoI’s plan is to inoculate 300 million individuals by August 2021, and another 500 million by end-2022. Thus, going by my calculations, the cost of the first phase works out to Rs 24,000 crore, and the second Rs 40,000 crore. While the amounts seem large, the total works out to a little more than .005% of GDP at market prices. So, contrary to common perception, funding or the fiscal strain does not appear to be the key problem — despite Ayushman Bharat CEO Indu Bhushan, on Tuesday, questioning the need for GoI to finance the mass vaccination if India is indeed on its way to achieving ‘herd immunity’. In fact, the tab could be smaller depending on the quantum of support from the global vaccine alliance that India is part of.

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Besides, there is no real case for the vaccine to be made free for everyone. For one, some quantities of the vaccine may be made available in the open market. It may make sense also to exclude corporate sector (both public and private sector) employees to be left out of the ambit of the ‘free vaccination’ programme. They can either pay out of pocket or their employers can fund it. Private hospitals should be asked to inoculate their own staff.

Partners in Vaccination

GoI can finance the vaccination drive through a cess on direct taxes and partly through borrowing. Since states will ultimately have to implement the programme, the Centre can transfer the funds to states either as grants or as special long-term loans in which principal and interest can be repaid when the loan tenure — say, 3-5 years — is over.

This has to be done carefully. Healthcare capacity varies widely across states. So, there is a need to also augment capacity. States like Jharkhand, Uttar Pradesh and Madhya Pradesh, for instance, may need more resources than others. The allocation of funds needs to be done on the basis of the specific needs of the vaccination drive, not on some pre-determined formula based on the parameters usually applied for resource transfer like the size of the population.

The fact that money may not be the biggest problem in the vaccination drive does not, however, mean that things will be easy. First, the number of vaccinator and support staff has to be ramped up sharply. The only way to do this is to draw on the entire pool of healthcare and allied workers (community workers, pharmacists, physiotherapists, etc). They need to be put through a rigorous training process. Besides, given the variation in capacity across states, medical personnel have to be moved from ‘surplus’ to ‘deficit states’. This is a mammoth task.

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Existing facilities such as primary health centres and government hospitals need to be upgraded to make the cut as safe, hygienic vaccination centres. This becomes even more challenging in rural areas where these are often the only medical facility available for the local population. If they are already functioning as Covid care centres, an isolated vaccination facility where infection risk is minimal needs to be built.

Finally, there is the challenge of transporting and storing the vaccine at relatively low temperatures. One could recall the frequent reports of large amounts of fruit and vegetables rotting due to storage problems while struggle to keep up with demand. Industry estimates peg the existing cold storage capacity at 400-500 million doses, while the number of doses required for the drive is about 1.6 billion. Then there is the business of ensuring steady power supply to ensure that the vaccines don’t lose their potency.

Think Out of the Icebox
Clearly, the government cannot do it alone. The private sector — healthcare and logistics — will have to be roped in. India’s fabled capacity for ‘jugaad’ will be put to the ultimate test. UP, for instance, is examining the possibility of using repurposed refrigerated vans from other industries to transport vaccines.

The final, and perhaps the most vital, thing to worry about is that India’s long-standing structural problem — health and other social infrastructure —has historically been skewed towards urban and semi-urban areas. The private sector will, no doubt, pitch in wholeheartedly. But will it be able to deliver much beyond the cities and towns? The ultimate success or failure of India’s Covid vaccination drive will depend on its ability to reach its villages.

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(The writer is chief economist, HDFC Bank. Views are personal.)



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