Taking stock of the vaccine rollout - Capital Economics
India Economics

Taking stock of the vaccine rollout

India Economics Update
Written by Shilan Shah
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Almost a month since the start of India’s vaccination drive, it appears highly unlikely that the government will meet its target of inoculating 300m people by August. For now, we maintain our assumption that it will take much longer to vaccinate the most vulnerable – perhaps 12-18 months. But these are still early days. Increased willingness among the public, more funding for the rollout and greater vaccine availability would all allow the pace of vaccination to accelerate: if that happened to a significant degree, we’d be inclined to revise up our GDP forecasts for 2021 and 2022.

  • Almost a month since the start of India’s vaccination drive, it appears highly unlikely that the government will meet its target of inoculating 300m people by August. For now, we maintain our assumption that it will take much longer to vaccinate the most vulnerable – perhaps 12-18 months. But these are still early days. Increased willingness among the public, more funding for the rollout and greater vaccine availability would all allow the pace of vaccination to accelerate: if that happened to a significant degree, we’d be inclined to revise up our GDP forecasts for 2021 and 2022.
  • 6.5 million vaccine doses have been administered in India since the start of the inoculation drive on 16th January. That’s impressive in absolute terms. But the sheer size of the population means that the number of vaccinations per capita is still very low. (See Chart 1 and here.) At the current daily rate, 60m people in India will have been vaccinated by August (see Chart 2), which would be a long way short of the government’s target of inoculating 300m people (healthcare and frontline workers, over 50s and those with underlying health issues) by then.
  • Several factors could help speed up the rollout. One is greater willingness to take the vaccine among the public. There is scope for improvement. A survey conducted by LocalCircles in late January reported that only 40% were willing to get vaccinated. However, that jumped to 70% on the proviso that there were no major side effects from the vaccine, which hopefully will become clear over the coming weeks.
  • Another factor is greater funding for the vaccine drive. A key element of the Finance Ministry’s accommodative Union Budget was a doubling of healthcare spending in the next year. (See here.) That should help improve access to vaccines such as by funding the operation of more inoculation centres.
  • Finally, constraints on vaccine availability should ease, as manufacturers increase capacity. And, in addition to the Oxford/AstraZeneca and Bharat Biotech vaccines that have already been approved, it appears likely that the Sputnik V vaccine – for which India has 100m pre-orders, will be approved by regulators in March.
  • At the same time however, it is plausible that the rollout could slow before a significant share of the population is reached. Previous vaccine drives such as for Measles-Rubella (which started in 2017) tailed off once the easier-to-reach urban population was covered. And there are broader risks too: for instance, mutations of the COVID-19 virus could force producers to conduct fresh trials on new vaccines.
  • Our working assumption has been that the 300m deemed most vulnerable will be vaccinated within the next 12-18 months (on current trends it would take nearly three years), and that should allow restrictions on most domestic activity to be loosened during the second half of this year and early 2022.
  • Given the progress so far and the balance of risks, we see no compelling need to alter those assumptions just yet. But we will be tracking developments closely: if the vaccination programme accelerates significantly, we would be inclined to revise up our GDP growth forecasts. They currently stand at 12% and 9.5% for 2021 and 2022 respectively, which is already above-consensus in both cases.

Chart 1: Total COVID-19 Vaccine Doses Administered* (% of Total Pop, Latest)

Chart 2: Total COVID-19 Vaccine Doses Administered in India

Sources: CEIC, Refinitiv, OurWorldInData, Capital Economics

Sources: CEIC, Capital Economics


Shilan Shah, Senior India Economist, shilan.shah@capitaleconomics.com
Darren Aw, Asia Economist, darren.aw@capitaleconomics.com