Free food, free vaccines to cost extra Rs 1.05 lakh crore: SBI Research

According to a report by the State Bank of India (SBI), the extension of Pradhan Mantri Garib Kalyan Anna Yojana by five months and provision of free vaccines at government facilities to everyone adult Indians will cost the Union government extra Rs 1,05,000 crore over and above its budgeted expenditure for FY 2021-22, writes Krishnanand Tripathi.

New Delhi: The extension of Pradhan Mantri Garib Kalyan Anna Yojana by five months and the Centre’s decision to provide free vaccines at government facilities to everyone adult Indians will cost the Union government extra Rs 1,05,000 crore over and above its budgeted expenditure for FY 2021-22, said a report by India’s largest lender State Bank of India.

“The extension of PM Garib Kalyan Anna Yojana from July till the end of November 2021 is expected to cost Rs 91,000 crore, while vaccinating 75% of 18+ adults is expected lead to an additional burden of Rs 13,851 crore,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India. In the Union budget, finance minister Nirmala Sitharaman had announced an outlay of Rs 35,000 crore for providing Covid vaccines. However, the slow pace of vaccination drive and rules regarding vaccinating the 18-44 year age group has come under criticism from the top court of the country and opposition parties.

Early this month, in his address to the nation, Prime Minister Narendra Modi announced the government’s decision to provide free vaccines to all adult Indians at government facilities while vaccination at private hospitals will remain paid at a maximum price fixed by the Centre.

Free vaccination to start from June 21

PM Modi said under the new vaccination policy, that will come into effect from June 21, the occasion of International Yoga Day, every adult Indian will be entitled to get free Covid vaccine at a government facility as the Centre will procure and distribute the vaccines free of cost to states. Prime Minister Modi also announced extension of subsidised food grains to 800 million Indians, two-third of the country’s population to help them tide over the Covid induced difficult period as several States announced local lockdowns to contain the ferocious second Covid wave which killed nearly 1,70,000 Indians in just two months – April and May – this year.

Additional burden

However, the government has not made public the additional financial burden that it would have to incur in the current financial year. According to reports, the additional burden was estimated to be in the range of Rs 80,000 crores to Rs 1,50,000 crores. However, the State Bank of India’s research division has estimated the cost of these two measures at around Rs 1,05,000 crores.

“For now we have assumed Rs 400 per dose as the vaccination cost,” SBI’s Chief Economist Ghosh said in his report. Ghosh, however, warned that the number could go up if India entered into a purchase agreement with foreign companies.

Faster approval of foreign vaccines

In order to tide over the shortage of vaccines in the country, the government has announced accelerated approvals to Covid vaccines approved by the World Health Organisation (WHO), the US and European regulators. The government said Covid vaccines approved in Russia and Japan would also be eligible for the accelerated approvals.

The Centre has already approached US vaccines makers such as Pfizer, Moderna and J&J for accelerated procurement with Pfizer saying that it may be able to supply up to 5,00,00,000 crore doses from July onwards.