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Dilemmas in Policy Response to COVID-19 - April 25, 2020

India and the world are facing an acute public policy dilemma over medium-term response to COVID-19. As a short-term response, everybody agreed and implemented the lockdown. However, the lockdown itself has generated an immediate policy issue about how to sustain the millions who earn their livelihood on a day today basis. Termed as a conflict between lives and livelihoods by economists like Bibek Debroy, Dr. Narendra Jadhav and many others, the situation has created a dilemma for policy makers. The dilemma is with regard to how much of the risk the government can take to ensure livelihood for the poor. The risks involved are again of the short-term and the medium term. In the short term, it is a matter of not only risking the lives of those poor but also about the community spread of the coronavirus. In the medium-term, it is about the food security for the poor to the least, but also involves health risks with regard to other diseases affecting the poor. In the absence of livelihood means, the poor would not have much options with regard to health treatment for multiple diseases that might already be in existence in their family or would be knocking at their doorsteps sooner than later. The health risks in the absence of livelihoods also involves issues of pregnancies and mortality rate at the birth. A long-term response to avoid such a scenario in the future could be to build a robust public distribution system and a public health system. As suggested by Amartya Sen, Abhijeet Banerjee and Jean Dreze, the policy formulations with this regard should consider the issues of free-riders but must not bogged down by it. Even then, this would be the long-term measures that leaves us with uncertainty about medium-term policy response.

These questions are much more severe for India and other developing countries than the developed western world. The common question for all the countries, now, is how to halt the slide of economy into great depression, and then how to revive it? Even though the question is global, almost all the countries are trying to address it on their own wherein they wish to lessen interdependencies caused by economic globalization in last 40 years, i.e. since the opening up of China in 1978-79. Here again, the policy dilemma for all the countries is whether to make adjustments in the present model of economic growth to make it more desi or to change it fundamentally! The later option could have more sustainability chances, but there is the deep element of uncertainty involved in it as well. The uncertainty here is with regard to venturing into unknown and making it successful without causing more immediate damage to people’s livelihood. At present, the world doesn’t know of any successful model of economic prosperity that has an in-built shock-proof mechanism against developments in other parts of the world. In short, what is known and popularized as economic growth, development and prosperity was achieved through processes of interdependencies. Whether any country with substantial population can recreate the phenomenon of growth, development and prosperity without venturing into the phenomenon of interdependencies is the looming uncertainty for policy makers. Perhaps, the public policy around the world need to redefine contours of political economy by re-examining definitions of economic growth, sustainable development and prosperity for all.

- Prof. Parimal Maya Sudhakar