India Policy Watch: What Matters and What Doesn’t
Insights on burning policy issues in India
— Pranay Kotasthane
The Union government has received a lot of flak over its criminal negligence in managing the pandemic response. It deserves nearly all of it, and more. We have written about this over several editions.
Today however, I want to look at three incorrect — or at least problematic — frames being used to blame the government’s pandemic response, shoddy as it is. The intention is to ask the right questions. Only then can we hope for the right answers.
Incorrect Frame #1: Blame Vaccine Diplomacy
As the cases have skyrocketed and vaccine supplies have plummeted, India’s vaccine diplomacy has come under the scanner once again. The question doing the rounds is that did India commit a grave mistake in gifting vaccines to other nation-states? With the benefit of hindsight, the dominant narrative today is yes, by prioritising vaccine exports over domestic inoculation, India did a disservice to its own people.
In edition #102, I made a realist case for India’s vaccine diplomacy. I stand by that view. The original sin of the Union government, of course, was that it didn’t place enough vaccine orders and hasn’t done so even until now.
Rewind to February and you’ll notice how complacent the government was of having conquered the virus had peaked. It seemed that the government would sail through a dying pandemic with a snail paced vaccination campaign. It is with this line of thinking that vaccine diplomacy began.
Another way of thinking about vaccine diplomacy is to think of its opportunity cost. At the current vaccination rate, India would’ve had five additional days of supplies had it not given any of the nearly 10.7 million doses as gifts to other countries. In fact, a majority of the deliveries (nearly 35 million) have been under commercial terms between manufacturers and other countries. It’s likely that countries would’ve not helped India in the current crisis the way they did had India blocked exports of vaccines earlier.
Holding the Union government accountable for its mistakes is important. Equally important is identifying what the exact mistake was. By internalising that India was wrong in extending its help to other countries in its own time of help, we would be learning the wrong lesson. Such heuristics tend to stick around for long in the Indian strategic affairs community. Try arguing for developing overseas operations military capability of any kind and the idea will be shot down citing the IPFK failure in Sri Lanka more than three decades ago. It’s important that vaccine diplomacy isn’t perceived as another IPKF moment. This pandemic is as much about learning the right lessons as it is about not learning the wrong ones.
Incorrect Frame #2: “ದುಡ್ಡಿಲ್ಲ” Government Has No Money
Nero fiddled while Rome burned. How we love this story. Every ineffectual leader in the times of crises gets equated to Nero. This time around, the charge of callousness rests on the government’s plan of redeveloping India’s central administrative area at a reported cost of nearly ₹20,000 crores. The critiques argue: can’t the government redirect some of this money for increasing the number of hospital beds, oxygen plants, and vaccine procurements? — problems that are dire and important today.
From a political perspective, this line of attack probably makes for a powerful narrative. I wouldn’t know. But wearing a policy analyst’s hat, this logic makes little sense. That’s because the government has enough monetary resources at its command for fighting the pandemic and building a new parliament, both.
Facts of the matter first. The ₹20,000 crores amount is to be spent over multiple years, of which less than ₹2,000 crores is being spent this financial year. For perspective, this is 0.05% of the Union government’s FY21-22 budget.
Moreover, such arguments asking for diverting money from one purpose to another play in the hands of the government by inadvertently giving it safe passage as long as it can show monetary constraints. The truth of course is that the Union government has enough options at hand to beg, borrow, and steal money for fighting the pandemic.
The State as an institution is unparalleled. It doesn’t easily run out of money like households do. If it does, it always has the option of monetising deficit (albeit at the risk of future inflation). And if there ever was a case to be made for monetising deficit, a raging pandemic would definitely make the cut. After all, what is the use of a democratic republican State that cannot spend to protect the life of its citizens dying by the thousands every day?
In fact, after a lot of hullabaloo about how asking the states to procure vaccines from manufacturers might lead them to fiscal troubles, most states, — including low-income ones such as Bihar and Odisha — have promised free vaccines to all adults in the 18-45 age group. As an example, we estimated that Karnataka would require approximately ₹3900 crores to vaccinate all its residents in the 18-45 age group for free. Of which, ₹3176 crores can be borrowed immediately by using RBI’s Way and Means Advance facility.
Don’t listen to government excuses over money in these times.
PS: As far as the Central Vista Redevelopment Project is concerned, India would indeed need a new parliament a few years down the line once the delimitation of constituencies takes place in accordance with the 2031 census (thanks to a helpful reader, Kamil, for dispelling my belief that delimitation would happen in 2026). This is not a new demand and India is capable enough of funding the redevelopment of a small pocket in Delhi even as it fights a pandemic.
PPS: It beats me why the government could not postpone the Central Vista Redevelopment Project until the second wave peaked. That would’ve been prudent.
Incorrect Frame #3: The Liberalised and Accelerated Phase 3 Strategy is to be blamed
The move to allow state governments, private hospitals, and industrial establishments to procure vaccine doses directly from the manufacturers has been under fire ever since it was announced. The criticism is on two counts.
One, this approach would lead to confrontation between state governments seeking better deals from manufacturers. Two, the Union government can use its scale to strike better deals with both domestic and foreign manufacturers.
The solution suggested is that the Union government must incentivise vaccine production, procure all these vaccines from manufacturers, distribute them using a transparent formula to the states, and provide all vaccines for free. Moreover, do all this in mission mode.
The problem with this criticism is that it heavily overestimates the Union government’s capacity. To expect a government that couldn’t strike advance contracts with a handful of manufacturers to do all the above is to ignore the constraint that inadequate state capacity imposes.
From a citizen’s perspective, to expect a different result while repeating the same failed strategy doesn’t make sense. I suppose most people think that the real cause of the government’s ineffectiveness is either the lack of money, intent or both. In reality, the problem is a deeper one, of capacity — bureaucratic, intellectual, and implementation.
Another deeply ingrained narrative today is that if Indian governments can organise Kumbh Mela (spot the irony) and nationwide elections, it should also be able to organise a mission mode vaccination campaign. Unfortunately, it is more likely that vaccinations will continue in the slow burn mode over multiple years and will need to deftly change track as the virus mutates and better vaccine variants get discovered. I doubt a centrally planned system will be able to solve for all this.
State capacity should change public policy alternatives we choose and hence, it’s better to get state governments and private players to get involved. As the number of vaccine candidates increases, more options will become available to these entities, far quicker than a centrally planned system run by a low-capacity union government.
As Ajay Shah and Amrita Agarwal write:
“These changes will unlock the energy from varied Indian buyers — states, firms, communities, and individuals — and increase their accessibility to global supply.
Indian buyers need to explore the global vaccine market and be comfortable paying market prices. As an example, the Israeli government paid $28 per dose (i.e. ~2,000 per dose) to Pfizer and Moderna in late 2020, which was 43 per cent higher than the price paid by the US and the EU. This got them rapid vaccine deliveries. They have vaccinated most of their population and now do not force people to wear masks.
If Indian persons (private and public) put down ~2 trillion, i.e. a billion doses at ~2,000 per dose, this would yield transformative impact. This is a price worth paying to control the economic and human cost.”
Of course, this doesn’t mean the Union government can wash its hands off entirely. It still has an indispensable role to play. One, only it can accelerate domestic production by getting all vaccine manufacturers to share knowhow and ramp up capacity. Two, while the global supply squeeze eases, it must create a transparent prioritisation mechanism for distributing the scarce supply within states.
In sum, to get the right answers, we need to ask the right questions, again and again.
Read the full edition here.
Disclaimer: Views expressed on Anticipating the Unintended are those of the authors’ and do not represent Takshashila Institution’s recommendations.