What are the Policy Solutions for COVID - 19?

It has been more than for months, India continuing its fight against the challenges posed by the pandemic with the same questions being discussed in the opinion pages and policy circles - What could be the appropriate policy measures to address this unprecedented crisis? What would be the ideal approach for sound recovery? But, what kind of intervention should one recommend for what is changing daily? Answering these questions with only 20 weeks of historical experience or from the century-old experience of the Spanish flu (CDC, 2020) is daunting and best response to such a scenario is likely to make one conclude on a note that “I don’t know really what silver bullet can address this unprecedented situation”, underlining the famous Greek proverb, “The only thing I know is that I know nothing”. Adding fuel to the fire, the economy already in tailspin mode experienced this shock and recent episodes of cyclone disaster, escalation with the china at the borders feeds into the decision and priorities, to an extent - deviating from the efforts aimed at containing the contagion of the virus. From the standpoint of economic policy, both the monetary and fiscal authorities continue to intervene with measures and reforms which protect the interest of the businesses and the ordinary citizen. But, the instant priority has to be for healthcare, not economic policy. For the economic goals, in the short run, governments ought to assure patience and confidence among the stakeholders and bolstering recovery can be expected in the aftermath of carnage being caused by the COVID. As emphasized by Goldberg (2020) in his paper that strong leadership in shaping the health policy is critical to ensure humility and consistency in the approach. The former demands one to realize that we stand in an unexplored terrain that negates our prior experience to a great extent. Mistakes and Failures are bound to happen and the post – COVID commentaries will center around discussing the normative aspect for future policy guidance. What is more critical is to have an approach towards limiting the damage being caused and potential risks that can materialize in the post COVID scenario, using a coherent and self-consistent strategy. Cross country experience in containing the spread has been different ranging from aggressive testing, travel bans, quarantines, etc. in East Asia, mixed approach across Europe with some countries testing aggressively, information & advice campaigns without travel and lockdown measures and others imposing lockdown and travel bans. In the US, in the initial weeks, there was a lack of strict measures, followed by aggressive testing. In India, the strict lockdown was imposed 25 march onwards, which has begun to start lifting amid an all-time high spike in the number of cases day by day. The illusion of statistics might make one wonder that why in a scenario of the exponential rise in total tally, the government has initiated unlock measures. The underlying reason is - among the identified clusters across the states, four states account for more than sixty percent of the cases. Also, as on 10 June 2020, the number of cured or discharged cases is more than the active number of cases i.e. 135205 and 133632 respectively (GoI, 2020). The tally of the deceased stands at 7745 (GoI, 2020). The difference in approach across the countries can be attributed to the difference in the social structure, culture, and political systems. The inconsistency in response to the pandemic has not been explained for many economies even after having differences. Selective restrictions on travel by the US underline this phenomenon. In India, state governments also had an inconsistency in terms of limiting the migration despite having lockdown measures. The lockdown among states has been selective with few states having complete lockdown and others witnessing partial lockdown in selected districts where hotspots for COVID were identified. Now, as the unlocking begins, a selective approach is being followed with a state like Odisha extending lockdown till the end of June, etc. while others – opening up businesses and public institutions. For the appropriate economic policy measures, already there has been a lot of debate across the policy circles, especially focusing on the post COVID scenario. There is a broad consensus across the globe that fiscal authorities have a greater role to play in carving the way towards recovery. The weapons in the central bank artillery to fight the COVID are limited especially in terms of incentivizing small businesses and aggressive fiscal measures (Gourinchas, 2020). Despite this, the efforts of the monetary policy practitioners have been preemptive in ensuring resilience in the financial system using both conventional instruments like continuous policy rate cuts and the unconventional instruments like TLTROs, aimed at ensuring sufficient liquidity in the financial system. The five trance of measures announced by the finance minister has focused on protecting the interest of the businesses and stakeholders across the various sectors (See Padha, 2020 for a summary). . To determine or predict what exact approach should be there from the policy front, what response is best to protect the interests of informal labor, what will be the potential implications on production output due to labor migration, what will be the new diversified global supply chain network and how different sectors are fare etc. are unanswerable without knowing the duration of a pandemic. Silverlining without the Silverbullet Though the policy practitioners are short of silver bullet to the crisis but, COVID- 19 has a silver lining in terms of change brought on by the pandemic in lifestyle and productivity. The work's structure has gone under transformation with social distancing norms in place and work from home becoming the new normal. The most significant shift has been witnessed by IT firms. The transport congestion has been out of the picture, saving hours of commuting. This has been substituted with work and family time. Emission levels have touched a record low in the past three months. The stakeholder in the education sector is in the hunt to replace classroom instruction with e-platforms. In the FMCG or retail sector, consumer preferences have shifted from the traditional brick mortar shopping to e-commerce platforms. The currency market stakeholders and think tanks are exploring digital currency platforms that ensure stability and satisfy the characteristics of money. While there are gainers on one side of the story, the interests of the losers cannot be sidelined. Appropriate compensation has to be ensured for those standing on the verge of bankruptcy or failures. Rolling back the progress is not the way out, we ought to embrace it. The trade-offs resulting from the emerging technology substitutes and the potential shifts in global trade, the focus should remain on augmenting productivity measures without jeopardizing the interest of the individuals or communities who have been severely hit by the crisis. CONCLUSION The most daunting task in the near future due to recent shifts in the work structure across businesses with modern technology-based solutions is for the ones who are still challenged by the technology. Small businesses in India still lack the appropriate knowledge to work with e- platforms. This can result in serious tradeoffs from the standpoint of automation and globalization. Giving a push to healthcare infrastructure should remain part of continuous efforts. The overall testing rate still remains very low for India (approx. 150,000 per day). Striking a wedge between protecting the interest of these communities and adopting the best emerging practices that enhance productivity should remain in focus. It is only by embracing the positive takeaways from this crisis which can help to find meaning in what has transpired us. References Pinelopi Koujianou Goldberg is the Elihu Professor of Economics at Yale University and former Chief Economist of the World Bank Group. CDC (2020), “1918 Pandemic (H1N1 virus)”, Centers for Disease Control and Prevention. Gourinchas, P-O (2020), “Flattening the Pandemic and Recession Curves”, online manuscript. Richard Baldwin et al. (2020). Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes. Beatrice Weder di Mauro 18 March 2020 GoI (2020), Ministry of Health and Family Welfare, Government of India. Padha, V. (2020). Economic Relief Package for COVID by GoI - Key Takeaways from Day 1 Briefing[Blogpost], retrieved from www.arthvimarsh.com