The second one wave of Covid-19 is overwhelming India. The official death toll is already inching towards 250,000, but this is nearly surely a huge underestimate, as the virus sweeps through rural India and kills many whose deaths will never be captured in official data or in media reports. A rapid and universal vaccination programme is very important to keep watch over a surge of this magnitude and time is of the essence — for the virus isn’t standing still.
At the moment, the blunt truth is that India has an inadequacy of vaccines. In December, one of us, in a piece of writing published in The New York Times, warned that the approval of vaccines is probably not the beginning of the end, but the beginning of an endless wait. Unfortunately, the warning has materialised, with tragic consequences.
Vaccine procurement and ramping up of production are fundamental. Unfortunately, this can’t be “left to the market”. Price signals cannot elicit a rapid provide response in the short-run because of capacity constraints on the one hand, and high barriers to entry on the other. Vaccines are being produced today under exclusive vendor licensing and the market is a seller’s market. What is needed, subsequently, is to alter this situation.
One step forward would be to use the flexibility that the World Business Association provides, and issue obligatory licences for vaccines. While that will be helpful, to allow for extra capacity to be built, more must be done. For vaccine production, after highbrow property rights considerations, there are other extra technological and regulatory complexities that India will have to be working tough to unravel.
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For a complex problem of this size, we may need a combination of old-fashioned planning, newer regulatory economics and an institutional policy constitution to effectively coordinate between different units of the government.
Starting with the central government, because we are dealing with vaccine manufacturers with marketing power, it’s best to have a unmarried negotiator exercising countervailing monopsony power. The negotiations can entail several dimensions including price, quantity, schedule of delivery and so forth. The Union government is best positioned to maintain the production- and procurement-related leg of vaccines.
A fair price could be agreed upon — enough to meet production needs without too much concern immediately approximately fiscal cost, again a luxury afforded to the Union government (after all, the fiscal cost from a fragmented state/Union strategy will likely be higher). As regulators, central institutions can also examine the manufacturing facilities of these companies and identify bottlenecks.
Moreover, the central government will have to continue to foyer foreign governments to calm down Highbrow Property (IP) provisions and share technology. There was some positive momentum on this front — with the USA and France backing IP suspension — but it’s going to want to be taken to its diplomatic conclusion. Despite the fact that building new capacity takes a couple of months, we will be able to need vaccines for the foreseeable future (to take care of variants and boosters). Again, it’s the central government which has the diplomatic heft to carry out negotiations in this respect.
While the Union government has the lucid virtue in facilitating production and procurement, it is state governments who hold the key at the distribution end. The states have localised information approximately vaccine requirements. They supply boots on the grounds. Since the federal units have complementary strengths and weaknesses, they will have to suppose a division of labour that facilitates the most productive production and distribution of vaccines.
Pandemic management will also have to conquer the knotty issue of political economy. The blame game between the Union and state governments over an fundamental commodity such as oxygen is visible in court proceedings. We need a translucent mechanism that is appeared to be reasonable and trusted by all of the stakeholders. Except for dealing with the allocation of vaccines and other fundamental medical supplies such as oxygen, this body could propose the financing sample for sharing the expenditure on Covid management, including vaccine procurement.
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To a point, the Supreme Court is already playing this role. Alternatively, what is required is a standing mechanism, probably with a constant sundown clause, that is trusted by all, and has the authority to arbitrate the claims of the powerful units and possesses the ability to process and understand scientific and medical knowledge.
Unfortunately, the current vaccination plan leaves much to be desired. Under this arrangement, states will struggle to procure vaccines and the Centre will struggle to efficiently hand out its share of vaccines. Emerging disputes would want to be settled in an ad-hoc manner.
The number of a couple of purchasers, in theory, gives the producer a bargaining virtue. Because of this, some states will either be priced out of the market, or the supplier will be faced with the difficult task of managing the “queue”, which will distract from the main task of maximising production. Recent statements by the Serum Institute of India indicate that this is already happening.
Far too many lives have been missing to Covid. But as a challenge to India (and to humanity), it is certainly not an unattainable task to administer the pandemic. But this can only happen effectively with cooperation, coordination, empathy, humility and scientific knowledge. It isn’t too late.
Arjun Jayadev and Avinash Tripathi teach economics at Azim Premji University, Bengaluru
The views expressed are personal