Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

Indian Vaccine Story

 

The vaccination process in India continues to fumble on. The process had begun relatively smooth but soon encountered troubles partly due to the vaccine hesitancy thus certain wastage coupled with the second wave of the Wuhan pandemic which devastated urban and the rural alike. It was aggravated by the shortage of vaccines. India had approved two vaccines, yet their supply was limited and could not be scaled up. While the Covishield being marketed by Serum Institute, but developed by Oxford and Astra Zeneca, was also to be exported to meet its global commitments the Covaxin developed by the domestic vaccine producer Bharat Biotech could not be scaled up because of technical issues. The Sputnik, developed by Russian scientists and marketed by Dr. Reddy’s Labs too is facing issues of manufacturing, which is likely to start in a month or so.

 

There was no doubt as mentioned in the previous columns too that the government strategy on vaccines lacked homework. There has been a talk about development of a top class digital infrastructure for vaccine administration but these are of no use in the absence of vaccines itself. US might be writing its vaccine certificates on the sheet of paper but what matters is whether the vaccine was available or not. The government had completely misjudged the requirements for the vaccine for a population of the size of India. India needed a basket of vaccines and not merely two or three. There is a promise something kept repeating of availability at some future date but what was important was the availability at the moment of crisis. As mentioned before, PM Modi’s reputation might have suffered some impact but the real impact would come if India faces a third wave before vaccinating significant section of the population.

 

The troubles over vaccination aggravated when the responsibility for vaccinating adults below 45 was entrusted to the states. The states were completely unprepared. Moreover in most cases, the vaccinators are those who do the testing also. When the wave surged, the tests had to be increased creating some shortage of manpower in vaccine administration. Furthermore, with the reserves running out, the vaccine producers are left with little stock thus most hospitals have run of stock. The government could have announced its intention of not vaccinating those below 45 much earlier. At least this would have clear to everyone. If there was no willingness for whatsoever reason, it could have come out earlier not at the last minute. It is something of a promise to dig a well but abandoning the promise at the height of drought leaving the task to others. This abdication of duty on the part of the Centre is something that would have serious repercussions at some point or the other.

 

 

The states, to be fair were advocating decentralization of vaccine procurement. The firms too wanted to sell vaccines in the open market. The government apparently seemed to have called their bluff. Yet one wonders if this was to be occasion for calling the bluff. If the centre cannot curb the farmer’s agitation which is a superspreader event, the centre cannot even handle a vaccine strategy either. There seems to be patchwork in terms of vaccine administration. The government believes perhaps even today, the virus would disappear if some 30 crore population above 45 are vaccinated. The deaths of number of people below 45 and the risks these face in the course of them being the breadwinner seems to have made no impact on the centre. To add, the lack of sensitivity on the part of the Secretary, Health or for that matter Principal Economic Adviser added to the problems.

 

At this stage the states had no option but to seek procure vaccine from different sources. Both the Indian manufacturers have commitments not easy to maintain given their supply scenario. The states floated a global tender but to little avail. This was not surprising. As Pfizer seems to have indicated those bigger companies are least interested in dealing with state governments or private parties. They are more comfortable dealing with Central Governments given the supply demand dynamics. It is the seller’s market with high degree of inelasticity of demand. Given the price inelasticity, higher prices too would see demand for the products. Therefore barring Sputnik, other vaccine manufacturers would not respond to tenders. They would Centre to intervene and talk to them. The Centre had put its eggs into Novovax partly because of its price and partly because of it getting produced in Serum Institute in India. This gambit of saving pennies has led to the situation of losing pounds. Moreover, the gambit of Atmanirbhar and hoping that India would get is vaccines produced within the country seems to be in the minds of the government. It is a classic case of opting for domestic supply despite heavy loss of lives in the current wave and perhaps in the subsequent waves in case the vaccines don’t get successful. It was the case something reflecting of a mindset existed before the Green Revolution. India was willing to beg for food but unwilling to spend foreign exchange for fertilizers or seeds at least temporarily. The current Indian situation is begging for oxygen concentrations, tankers or for that matter ventilators but not in importing or tying up with vaccine manufacturers from abroad.

 

The second wave might be showing signs of abatement yet there is no room for complacency. The government must get its act together on the vaccine front. It is time that the centre regains control on the vaccine procurement and manages to get vaccines sufficient enough  to vaccinate large section of Indian population. There should be an element of transparency. There is no point in stating again and again of vaccines being on the anvil. They carry no credibility beyond a point of time and would boomerang big. Given the forecasts of children being affected in the future waves, the government should have no room for complacency and ensure children get vaccinated at the earliest possible time. The vaccines might not be available for children yet it is important to finish the trials early. The parents or grandparents cannot afford to let their children lose lives to the Chinese pandemic. While seems improbable, the vaccines can be administered to the Indian population in the shortest possible time. There needs to be walking the talk. The government must walk the same. Unfortunately, the willingness is simply missing. It’s obstinacy is to the point of willing to let lives lost but not change its  strategy if at all it can be called so.  The rest is empty rhetoric. Herein lies the tragedy as said again and again of the Indian vaccine story.

 

 

Comments

Popular posts from this blog

Decision Making as Output and Bounded Rationality

The Economics Origins of BCG Matrix

People and the Third Wave of Chinese Virus