Critically discuss how ‘Barbell Strategy, Safety Nets & Agile Response’ helped the Government of India to deal with extreme uncertainty imposed by Covid-19 Pandemic.
The uncertainty caused on behalf of the Covid-19 pandemic had made it quite challenging for policy makers in last two years to deal with changing scenarios due to mutating virus, travel restrictions, supply-chain disruptions and global inflation.
The economic survey 2022 mentioned how the central government adopted ‘Barbell strategy’ in combination with an ‘agile’ approach and ‘safety nets’ to tackle extreme uncertainty during the Covid-19 pandemic and prioritized saving lives over growth.
How this strategy works?
- It is a common financial market strategy used to deal with extreme uncertainties by combining two extremes. E.g. A person investing 80% of his money in fixed deposit (safety) and remaining 20% in crypto currency (volatile).
- One extreme of this strategy is an ‘Agile’ approach that uses feedback-loops and real-time adjustments. The approach is adjusted in short iterations based on feedback from a host of high frequency indicators.
- The Agile approach was seen in gradual unlocking according to the risk, lockdown 2.0 due to second wave, further opening of economy as vaccination increased.
- The changing scenarios during the pandemic made it unpractical to stick to the conventional waterfall approach, in which a problem is first assessed and then a rigid plan is made. E.g. Five year economic plan.
- The other extreme of the barbell strategy is provision of safety nets to cushion the impact of uncertainties on vulnerable section.
- Under safety nets approach, government took multiple measures for poor and vulnerable sections of society and economy. E.g. ensuring food availability to poor, pumping liquidity in market, Supporting MSMEs through various fiscal packages and schemes.
Thus, the government recognized the adverse impact of pandemic on both the vulnerable and on the economic activity. Hence, it adopted a mixture of safety provisions and an agile approach under the barbell strategy.