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Free vaccines, extra food grains to cost Rs 1.15 lakh crore extra in FY22

The Prime Minister’s decision Monday to provide free vaccines to states for all citizens over 18 years from June 21 is likely to cost the exchequer an additional Rs 15,000 crore compared with the Budget allocation of Rs 35,000 crore.

“It is too early to give a correct estimate with multiple suppliers and different prices. But the rough estimate is total expenditure for vaccines for this year may be Rs 45,000-50,000 crore. In the Budget, we had provided Rs 35,000 crore, and of this, the government has paid out about Rs 5,000 crore,” a senior government official who did not wish to be named told The Indian Express.

With the Central government assuming the full cost of vaccination, states will not have to make extra provision for this in their budgets, the official said. “Most tenders have not been successful. So states’ expenditure so far on procurement of vaccines was negligible; it will be nil henceforth,” he said.

Another decision to extend the free food grains supply under the Pradhan Mantri Garib Kalyan Anna Yojana, till November this year, is estimated to entail an extra expenditure of Rs 1.1-1.3 lakh crore in 2021-22. At the peak of the second wave of the pandemic in April, the government announced the scheme would be restarted, and be operational for May and June.

Under the PMGKAY, 5 kg food grains — rice/ wheat/ coarse grains — is provided free once a month to all beneficiaries covered under the National Food Security Act, 2013. The scheme was originally launched during the first Covid-19 wave last year.

But the higher-than-estimated payment of arrears to Food Corporation of India (FCI) for 2020-21 is likely to help reduce the allocated amount for food subsidy this year. The financial impact of extending the scheme till November will, therefore, be softened to less than Rs 1 lakh crore, the official said. “The full impact of Rs 1.3 lakh crore will not be felt in the revised estimates because payments of arrears were advanced. So the actual impact would be less than Rs 1 lakh crore,” the official said.

So, in effect, the additional cost on account of vaccines and foodgrains supply, is estimated to be about Rs 1.15 lakh crore in 2021-22.

In 2020-21, the government overshot payment of food subsidies by Rs 1.02 lakh crore over and above the revised estimate, which includes payment of arrears to FCI and distribution of free food grains to over 80 crore people last year.

In an address to the nation on Monday, the Prime Minister reversed the earlier Covid-19 vaccination policy and said the Centre will buy 75 per cent of doses from vaccine makers, including 25 per cent of the state quota, and give it for free to state governments. No state government, he said, will have to spend on vaccine procurement.

The shift in the vaccination policy comes after the Supreme Court raised questions about it and several states sought centralised procurement of vaccines. This comes at a time when states across the country are planning to ease lockdown restrictions considerably in the coming days.

On May 1, the Centre had expanded vaccine coverage to the 18-44 age group, opened the market, introduced differential pricing and public-private split in supplies. Under this policy, states were given the responsibility of procuring vaccines and inoculating those in the 18-44 age group. However, states drew a blank in global tenders to purchase vaccines.

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