Vaccination cheaper on the economy than lockdowns: SBI Research

A report by SBI Research suggested that faster vaccination is cheaper on the economy than complete lockdowns, pointing out that the total cost of vaccination is much lower at 0.1 percent of gross domestic product (GDP) while the lockdowns has already cost 0.7 per cent of GDP.

Mumbai:As India grapples with lives vs livelihoods dilemma even after one year of pandemic, experts are of the view that the government should focus on an effective vaccination drive as the Covid-19-induced lockdowns cause more burden on the exchequer than the financial resources needed for mass vaccination.

A report by SBI Research Friday suggested that faster vaccination is cheaper on the economy than complete lockdowns, pointing out that the total cost of vaccination is much lower at 0.1 percent of gross domestic product (GDP) while the lockdowns has already cost 0.7 per cent of GDP.

The report penned by the bank's Chief Economic Advisor Soumya Kanti Ghosh further said that given the current circumstances of partial, local and weekend lockdowns in almost all the states, India’s real GDP growth forecast for 2021-22 has been revised downwards to 10.4 per from 11 per cent earlier.

“Total loss arising from the limited lockdowns is estimated at Rs 1.5 lakh crore; of which, Maharashtra, Madhya Pradesh and Rajasthan account for 80 per cent and Maharashtra alone at 54 per cent,” he said.

With the entire Maharashtra is in lockdowns till month-end, its Rs 29.8 lakh crore economy will see an erosion of Rs 81,672 crore.

However, with 15 of districts under weekend lockdown, the economic impact on Madhya Pradesh is seen at Rs 21,712 crore of its Rs 11.3 lakh crore gross state domestic product (GSDP), and that of Rajasthan, which is also under lockdown till May 3, its Rs 12-lakh crore economy will lose Rs 17,237 crore.

Ghosh's 0.1 percentage point of GDP loss assessment is based on the fact that this is only 15-20 per cent of these states' health expenditure Budget assuming half of the population in these states will get vaccinated by the Centre.

The 13 severely affected states will have to collectively cough out Rs 1,66,216 crore; of which, UP will have to spend the highest at Rs 32,009 crore, given that it has 13.6 crore people above 18 years who are eligible for vaccination.

It is followed by Maharashtra at Rs 26,432 crore for vaccinating 6.9 crore of its people and Rajasthan at Rs 16,269 crore to inoculate 3.5 crore people.

Drawing parallels with the 1918 Spanish Flu, he said this last deadly pandemic had more deaths in the later waves and, therefore, the focus should be vaccination to avoid larger fatalities later.

Citing the injection to infection ratio, he said this shows that the country made rapid improvement this year but it is still below Israel, Chile and Britain with only a paltry 1.2 per cent of its population inoculated so far.

India added around 3.32 lakh new coronavirus cases taking the country's tally to 1.62 crore, according to the Union Health Ministry data on Friday.

The death toll also increased to 1,86,920 with a record 2,263 new fatalities in the last 24 hours.

In terms of number of daily fresh infections, this is the highest count for any country since the disease came to light in 2019.

(With Agency Inputs)