Covid-19 Vaccine Can Kill The Virus, And India’s Recession TooBloombergQuintOpinion
Flush after the first Covid-19 inoculation, I had essayed a two-track distribution plan for the life-saving vaccine. The poor/needy/vulnerable should get it free from the state, while those who were willing to pay an “exaggerated” price could jump the queue under a Tatkal or “instant purchase” scheme. I had vaulted over the ethical chasm by asserting that the vaccine is neither a pure private nor an uncontested public good.
I had burnished my case by advocating that a mere 10% of the doses should be treated as a private good, to be sold at an unusually high price of Rs 10,000 per shot. I had then concluded my argument by proving, arithmetically, that this would give the state Rs 1 lakh crore to fully underwrite the free administration of 90% of the vaccine. I had rested my case with the rhetorical question: have you considered what would happen if we don’t allow a Premium Tatkal Scheme in Covid-19 vaccines?
- Thousands of Indian families would travel overseas to get vaccinated, thereby draining our resources instead of investing those in the local economy
- A flourishing black market would emerge in getting ‘priority medical prescriptions’ or accessing stolen vaccines – again, transferring legal cash to the underworld.
I thought I had made an irresistible case – a supertax on those who volunteered to pay, and a complete subsidy for the rest of the population. But I had not bargained for the energetic, vertically cleaved blowback from readers. Here is an authentic collection:
What a fabulous and innovative idea. Regrettably, the optics will make it appear “health care first for the rich”, and exactly what you foresee/fear is what will happen. The well-heeled will rush overseas for the shots: this came from a close friend and colleague whose political opinion I value.
I agree wholeheartedly. Kudos. From the perspective of mechanism design, it is great. Since the vaccine is a private good (rival in consumption and excludable), the market (voluntary trade between buyers and sellers) is the right instrument for its distribution. Since the vaccine is a public good (due to externalities that cannot be internalised through the free market, and due to the fact that the cost of development is a sunk cost), cross-subsidisation is the right instrument for making it available to those that the market would exclude: this came from another friend, a celebrated academician/economist at an American University.
There were a ton of other responses from unknown readers, several of them on Instagram! Here’s a representative sample:
While Health Benefits Are Great, Let’s not Downplay The Economic Impact
I am now much wiser after this feedback from readers. Clearly, I should have made a more compelling economic case for the Tatkal plan, rather than just a bleeding-heart subsidy argument. For instance, I should have highlighted that:
- Prime Minister Modi would not get any brickbats. The Tatkal plan would be implemented by private hospitals, without any involvement of the government or its machinery. What’s more, the private players would directly import a “non-government brand”, thereby not adversely affecting the availability of vaccines under the government’s immunisation drive. These private hospitals/clinics would pay a supertax of Rs 10,000 on each dose administered to willing buyers.
- Imagine the positive economic impact if hotels, airlines, theatres, bars, malls could get all their staff inoculated – wouldn’t their footfalls go up exponentially? If a hotel or airline could also bundle in a “free inoculation” for their frequent customers, wouldn’t business spike?
- Imagine that large industrial complexes could get all their workers inoculated on priority – wouldn’t their productivity jump exponentially too? As opposed to running half-empty on the shop-floor.
- Imagine if a 300-member shooting crew could get everybody a vaccine shot, instead of performing daily or weekly RT-PCR tests on each member – wouldn’t the production company prefer to pay Rs 10,000 per person once rather than spend Rs 1,000 per person per day or per week for 100 days?
I can cite example after example after example to prove that the Covid-19 vaccine is a powerful antidote against an economic recession. Yes, first and foremost, it’s a health weapon against the virus. But that shouldn’t blind us to its next-best utility – just as it can kill the virus, it can kill the recession too.
Raghav Bahl is the co-founder and chairman of Quintillion Media, including BloombergQuint. He is the author of three books, viz ‘Superpower?: The Amazing Race Between China’s Hare and India’s Tortoise’, ‘Super Economies: America, India, China & The Future Of The World’, and ‘Super Century: What India Must Do to Rise by 2050’.