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Universal vaccination? At proposed price, single dose will be 'higher' than poverty line

By Bappaditya Mukhopadhyay* 

If we must keep the serious repercussions of the third wave away we absolutely need to treat Covid vaccination as Fun Free, Universal and Now! It is just not ethical, but good economics. It is puzzling as to why the government is contemplating a complicated multi-party negotiation, differential pricing, market intervention in something where market economics will only cause more damage.
To understand this, we must begin with understanding network economics. In network economics, to an individual, the benefit of doing something not only depends upon what he does but also upon how many others are doing the same.
Expecting competition, market forces and prices to take care of demand supply gaps will have little effect in network economics. Vaccinations are perfect examples of network effect-more the individuals around me are vaccinated more effective is my vaccine! So, the decision to get vaccine must be universal because the benefits are universal.
There are two advantages of vaccines. One, it lowers the chances of contracting the virus and two, in the event that one contracts the virus, the effects are milder. Our best bet in keeping the third wave away is to first keep Covid-19 away as much as possible followed by lowering hospitalization instances should one get infected.
Keeping Covid-19 away through social distancing is a tougher task given our stressed economy, major metros with large population densities and many shared resources. Further, as vaccination lowers the chances of hospitalization, it would lower the pressure on the existing health infrastructure; and that directly benefits everyone. Once we accept the logic of universal vaccination, we must now address the possible bottlenecks that could prevent it.
The first and perhaps the most serious bottleneck is the supply itself. As of today, we have administered close to 17 crore vaccines. However, with less than 2.8% of the population receiving the complete dose and less than 10% receiving a single dose, at the current rate of vaccinating 3 million a day, we are well behind the curve.
It is true that initially there was reluctance among many to get vaccinated. Though, to blame the current level of low vaccination rate on the citizens’ reluctance, is misinterpreting the data and running away from solving the problem.
There are around 25 crore Indians (based on 2011 Census) who are above the age group of 45. Given that as of now only 17 crore vaccines have been administered, if everyone eligible in the 45 years+ age group had decided to get vaccinated, then less than 50% of them, would have received vaccination.
There has always been a demand-supply gap and we need to urgently procure vaccines at a rate that is least 10 times more compared to the current rate. We cannot only rely on domestic production. A large chunk must be imported, across Nations and across vaccine manufacturers.
To do this without diplomatic channels and leaving it at the “market forces” is disastrous. For this, it is must that the procurement is the responsibility of the Centre and not allow multiple players to compete, bid and clog the pipeline.
It doesn’t need rocket science to predict that profit-making manufacturers would be more inclined to serve the ones who can pay more
However, there are crucial areas of public private partnership but not in the process of procurement but in manufacturing and administering the vaccines. Nowhere else, certainly not in the process of price setting for the end user should be open to market outcomes. Covid vaccination must be free for all.
The argument of network economics states that end user paying nothing is not subsidy. It is the switching cost. The opportunity cost arising from some of the population not being vaccinated is much higher than the cost any government must be prepared to incur.
Just the GST shortfall for a month of lockdown will be many times over our budget for universal and free vaccination. With the current proposed pricing, at some places the cost for a single dose will be higher than the poverty line itself! Expecting economically stressed households to pay that is beyond any rational belief.
As a result, two things will happen, the rich, who can afford will get vaccinated first, and the poor will be left far behind. One could argue that the vaccine would be free in government hospitals. It doesn’t need rocket science to predict that profit-making manufacturers would be more inclined to serve the ones who can pay more (in this case the private hospitals) than others. Thus, many will be left behind.
The whole exercise will be a waste as the vaccines are only effective when more people are vaccinated! Should the rich pay more? Sure. The government can collect a “vaccine cess” from some of the taxpayers to meet any shortfall, but it must never allow differential pricing so that some get priority over others.
It must be, therefore, be the duty and right of every citizen, for their own good, to demand free vaccine for all- for themselves, their neighbors or anyone they will come in contact with.
---
*Professor at Great Lakes Institute of Management, Gurgaon. His research interests are in the area of Data Analytics and Public Policy

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