Does India Need Vaccine Federalism?

This paper focuses on the identification of the key determinants of the interstate differences in the incidence of COVID-19. It finds that it is best to have a dynamic, transparent, and explicit formula for the interstate allocation of vaccines under conditions of deficient supply. This is ideally handled by an objective expert body.

Views expressed are those of the authors only.

In the context of interstate distribution of COVID-19 vaccines in India, an erstwhile excess supply situation got quickly converted into a deficient supply situation soon after the eligibility criterion was extended from persons 60 years and above to persons aged 45 years and above and subsequently to persons 18 years and above. The vaccine supply situation may come under further pressure once the eligibility age is extended further to lower age groups covering children. The states have frequently complained about the inadequate supply of vaccines and have asked for a more transparent mechanism for their interstate allocations (Phadke et al 2021). At present, the interstate distribution is being handled by the Union Ministry of Health and Family Welfare. Any objective basis of the algorithm or methodology presently being used for this interstate distribution has not been shared with the wider public, and the complaint of the states regarding non-transparency in handling of interstate distribution of vaccines seems justified. Given the supply shortages, the initiative by the Government of India to augment vaccine supplies by granting approval to vaccines already approved by regulatory authorities in the United States (US), the European Union (EU), the United Kingdom (UK), and Japan subject to certain conditions is a welcome move.

It would be useful to consider whether a transparent formula for the interstate distribution should be worked out in a manner similar to distributing scarce central resources since the problem is comparable to a resource sharing problem in a federal framework. Such a problem has arisen because of instituting an administrative or regulated mechanism for interstate allocation of vaccines as opposed to a well-considered, transparent and objective mechanism based on recommendations of suitable experts representing not only the medical expertise but also that of social scientists, including economists. A market-based mechanism cannot be justified given the situation of supply shortage. Under such a situation and given the associated welfare objectives, a price control mechanism has become necessary. But the price regulation that is presently operating also requires to be critically examined by an expert committee.