Set up Covid commission to reignite economy

The Covid-19 pandemic has overwhelmingly exacerbated the challenges of public policy. It has thrust unusual pressures, compelling revision and updating of existing policies to deal with a disease, the dynamics of which remain uncertain. These policies had to suit the expectations of the common man in this persistent crisis while maintaining democratic processes.

Public policy is an outcome of the socio-political activity. It is an iterative process that involves defining the problem, collecting data and analysing it to arrive at a solution. Zelikow (an American attorney, diplomat, academic and author) had once stated that policymaking is a discipline, a craft and a profession. Effective policymaking is an arduous task.

The pandemic exhibited the urgency for skilled policymaking with uncertain budgets, undefined rules and rising aspirations of citizens. Innovation and adaptations were perhaps the two basic ground rules. The governments had to experiment with approaches and strategies which were economically, epidemiologically, and politically feasible. There were, of course, no magic bullets to fire.

As a consequence of the pandemic, there has been a tragedy with an unchecked threat to human life and millions of people losing their livelihoods across the globe. George Freeman, who heads the UK Covid Commission, has said that they have lost growth of 18 years in three months of the pandemic. Business insolvencies and bankruptcies are expected to rise. Healthcare economy is shattered. Economic upheaval has put globalisation in a state of suspended animation, raised economic nationalism and exposed flaws in economic growth policies. In developing and emerging economies, such as India, the situation is more difficult with under-resourced policies and unappreciated governance.

The multitude impact of the pandemic is mainly seen through the public health policy, the economic policy, and the food policy. There are, of course, other policies, such as labour and employment, construction etc, that had to be reformed to meet the exigencies of the pandemic. The education policy has been challenged as well, with the ongoing debate on how and when to restart schools. The policies regarding the private and public sectors also had to be moderated to enable them to restart economic activities. But, all these are broadly intertwined in the public health and economic policies.

The pandemic requires regular, perhaps daily, tracking of infections as well as economic activities. The co-evolution of the virus and the economy has to be managed. The lockdown provided the pandemic managers time for rapid preparedness to face the challenge while the unlocking of the economy and society increased the level of economic activities and also the number of total coronavirus cases.

Readjustment of public health policies, achieving actions that were hitherto never done, was the fastest and most prominent. Testing capacities were ramped up in no time with full provisioning of personal protective equipment for health professionals and workers. Covid care became more pronounced.

Fundamentals of the Indian economy too have, for once, proved strong. The country has been successful in maintaining the availability and access to food, despite spatial and economic disparities. Food supply chains were exempted during the lockdown. The policy for distribution of free and subsidised food was refined promptly, without worrying about financial implications to prevent hunger and deprivation. Over 800 million people have been fed at almost no cost to them.

But, for this to continue for a long time, greater efforts and investments would be needed. There is a need to improve the sustainability of food production systems and value addition, with due focus on nutrition security for the poor, children and women.

However, the resilience of the farm economy will be lost soon if other sectors of the economy are not revived quickly. The rising stress on agriculture may reduce the income of farmers and, resultantly, poverty may increase amongst the workers dependent on agriculture.

Meaningful economic growth should cater to the requirements of a healthy population. Conversely, a healthy population is sine qua non for quality economic growth. But, declining health and falling incomes and revenues have raised questions on the efficacy of the economic and public health policies. The pandemic has exposed the present growth paradigms across the nations, blurring the distinctions between the developed and developing. A new growth paradigm has emerged, with health and environment as its two key constituents.

New economic policies should thus fully reflect on the pandemic economy. However, the pandemic did not allow enough time for governments to gather knowledge, information and expertise from diverse disciplines, including public health, epidemiology, economics, law, politics, sociology, psychology, and, of course, ethics to achieve effective policymaking. As a result, collective global action through a cohesive policy is still to emerge.

Speedier decision-making, containment of the virus through behavioural changes in the short term and the development of a vaccine in the long run, enhanced mobility of persons and goods for expeditious fruition of economic activities, financial stimulus to businesses, investments in health technologies, and greater care for the most vulnerable populations are some of the other expectations from the pandemic-driven policymaking.

For navigation through the pandemic economy, the governments used helicopter money and infused more liquidity into the economy, but they may have to go beyond and do more, even if it means full or partial liberalisation of tax laws, policies, and instruments. Even monetary controls and regulations will need a recalibration.

For the economy’s revival, a vibrant response system to restore economic activities and control the accelerated spread of the virus appears unavoidable. Policymakers have to make difficult choices under extreme uncertainties, balancing the health and economic outcomes. The twin objectives of less, if not nil, virus and more economic activities would have to be achieved.

For this objective, the Government of India may set up a National Covid Commission for the rehabilitation of state and national economies and recalibration of economic and health policies to reignite the economy and create hope for healthy living in the society in the post Covid era. In the interim, the 15th Finance Commission can be tasked to assess state finances post pandemic by extending its term by another year.