Budget

Covid mishandling foretold in the Budget

Praveen Chakravarty

MAY 12, 2021

That the government did not come up with a detailed ‘COVID-19 Emergency’ Budget for the year 2021-22 is telling

“India has begun medically safeguarding not only her own citizens against COVID-19 but also those of 100 or more countries. I have provided ₹35,000 crores for Covid-19 vaccine in BE 2021-22…,” was the bombastic claim made by Finance Minister Nirmala Sitharaman in her Budget speech to the nation on February 1, 2021.

Ms. Sitharaman assured the nation that her government at the Centre was protecting not only Indians but also people of other countries against COVID-19 and that she had provided enough money. She also boasted that the overall Budget for health had been increased substantially and pointed to details in Annexure I of the Budget speech. In Annexure I, a table under ‘Health and Wellbeing – Expenditure’ lists ₹35,000 crore for ‘Vaccination’ under ‘CoVID related Special Provisions’.

Zero amount

Logically, when the Finance Minister says that the Budget for ‘Health and Wellbeing’ is being expanded significantly, one would expect to see these details in the Ministry of Health and Family Welfare’s Budget. Page 155 of the 350 page ‘Notes on Demands for Grants’ lists the Health Ministry’s Budget details for the year 2021-22. Item No.19 is clearly titled ‘Covid-19 Emergency Response & Health System Preparedness’, which lists an expenditure of ₹11,757 crore that was incurred in the previous year (2020-21) by the Centre in its fight against COVID-19.

But for the current year 2021-22, the amount budgeted for ‘Covid-19 Emergency Response’ is zero. One then ponders, wondering whether for some reason, COVID-related Budget provisions have been made under another expenditure item in the Ministry’s Budget this year.

The answer is ‘No’. It is a matter of alarm that there is no provision in the entire Ministry of Health’s 2021-22 Budget for COVID-19 vaccinations and other related expenditure. Moreover, the Health Ministry’s Budget for this year is lower than the amount spent last year when more money was needed to defeat the novel coronavirus this year. It turns out that ₹35,000 crore for COVID-19 vaccination has been allocated as “Loans/Grants to States” in the Budget of the Ministry of Finance.

Does this mean that when Ms. Sitharaman and the government sat down to prepare the Budget earlier this year, they did not think the Centre had any role to play in vaccination? Did they think that COVID-19 would just disappear providentially and that there was no money required this year for health supplies, infrastructure, and other expenses under the Health Ministry’s ‘Covid-19 Emergency Response package’? On what basis then did the Finance Minister say that her government would not only “safeguard” Indians but also the citizens of 100 or more other countries?

After this writer pointed this out first in a tweet, the Finance Ministry gave a long and a bureaucratic response about how even if the vaccination amount is not budgeted under the Health Ministry, the Centre could still use the money to procure vaccines and give it as an ‘in-kind’ grant to the States. This misses the point.

This is not a squabble about the technical details of budgeting for activities under different heads. This is about the intent, thought and actions of the Narendra Modi government in the middle of a national health emergency. Either the government was callous about the nation’s continued fight against COVID-19, or wanted to abdicate responsibility to the States entirely. If not, it would have made a meticulously detailed ‘Covid-19 Emergency’ Budget for the year 2021-22.

More questions

It is also justifiable to say that public health is a State subject, vaccination is the responsibility of the States, and hence, COVID-19 vaccination money should rightfully be given only to the States and not to the Health Ministry at the Centre. In which case, the States should also be given the full rights to decide and implement a COVID-19 health policy.

How is it then that the Centre chose to intervene and dictate an irrational vaccination pricing policy that has a lower price for the Centre and a higher price for the States for the exact same vaccine? If at the time of the Budget, the Finance Minister thought COVID-19 vaccination money was fungible and could be used either by the Centre or the States, then how does it square with the fact that with the same money, the Narendra Modi government would buy vaccines at a lower cost to vaccinate Indians above the age of 45 while the States would buy the same vaccines at a higher price for all others?

Vaccine is public good

It is amply evident that the Finance Minister and her government’s handling of the COVID-19 pandemic is like a deer caught in the headlights. The thought behind the Budget for COVID-19 is at odds with its health policies for COVID-19. A knee-jerk and confused vaccination policy, with varying price structures and quotas for the Centre, States and private hospitals for the same vaccine, has made a royal mess of India’s vaccination efforts. The basic economic principle that a COVID-19 vaccine is an essential public good and not a private good like flight tickets to be priced differently for everyone, seems to have been lost on the government’s policy makers. It has now put the lives of a billion Indians and India’s $3 trillion economy at risk.

Earlier in January this year, it was crystal clear that India would need to vaccinate the vast majority of its people to put an end to the COVID-19 pandemic. It was also well-established then that there were at least two vaccines available in India and more could be imported, as the Finance Minister herself alluded to in the Budget speech. The approximate costs for these vaccines were also known. Presumably, the Finance Minister and her team also knew the size of India’s population, and that they should multiply the costs of the vaccines with the total number of people to calculate the total amount needed for vaccinations.

Then, all that the government needed to do was to explicitly budget for the vaccination amount and other attendant costs in this final battle against the virus. The Health Ministry should have negotiated one standard price for each type of vaccine and procured them directly. After this, the vaccines should have been distributed to the States to set up vaccination camps and vaccinate people. All this was blindingly obvious even in January before the Budget was prepared. Lives and livelihoods were at stake. Instead, the Finance Minister resorted to headline and narrative management using half-truths and misleading claims.

Ineptitude

Is the Narendra Modi government so incompetent and reckless that even after five months, and after lakhs of lives have gone and billions of dollars lost in economic output it is still struggling to come up with a coherent vaccination policy and save Indians from this deadly pandemic? Alas, the answer is a yes. Let us not forget that it is the same Prime Minister and his government who thought that invalidating all currency overnight, in 2016, would magically eliminate black money or locking down the entire nation last year at just four hours notice would defeat the coronavirus as quickly as ‘the Pandavas won the Mahabharata war’.

Praveen Chakravarty is a political economist and Chairman, Data Analytics department of the Congress party

https://www.thehindu.com/opinion/lead/covid-mishandling-foretold-in-the-budget/article34537697.ece

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