Cost of vaccination drive to have differential impact on states: Aditi Nayar

by Nidhi Bhati

Cost of vaccination drive for people between 18-45 years may have differential impact on state government finances, according to ICRA’s chief economist Aditi Nayar. This depends on the proportion of people between 18-45 years in different states, she added. Nayar stated that state governments could absorb the cost by making small cuts in revenue or capital expenditure as the total cost for all states was estimated at Rs.500 billion. Further, ICRA noted that state government cash flows have been largely protected from the impact of the second wave and ensuing restrictions on account of the Rs.450 billion excess tax devolution the Centre transferred to the states at the end of March 2021. As a result, state borrowings in April 2021 were just 20 per cent of the figure indicated to the Reserve Bank of India and substantially lower than Rs.600 billion raised in April 2020.