‘Free vaccines to States to add just ₹10,000-crore’

Fiscal deficit to widen by only 0.4%: UBS

The government’s move to supply free coronavirus vaccines to the States for universal inoculation and extend free rations to help the poor tide over the pandemic will only add an additional 40 basis points (bps) of GDP to fiscal deficit, says a report. The increased allocation of free vaccines to all above 18 years coupled with extending free foodgrain supplies through rations will add only 40 bps to the overall fiscal deficit in FY22, which poses upside risks to the estimated of 6.8% of GDP, Tanvee Gupta-Jain, economist at UBS Securities India, wrote in a note. Assuming an average price of ₹150/dose, with a similar amount incurred on logistics and supply charges, we estimate the total fiscal cost to the Centre will be ₹40,000-₹45,000 crore and of this, ₹35,000 crore has already been provided for in the Budget, which means the Centre will have to allocate a maximum of ₹10,000 crore for this, she said.