According to Pranab Bardhan politicaleconomy is the distribution of political and economic power in a given societyand how such distribution affects the directions of development and policiesthat depend on them. Political Economy is the matter of two functions:political power distribution and economic power distribution. In a givensociety, it connotes the interface between political and economic powerimpacting the growth and development prospects of that very society. A goodconnection between political and economic power ends up in a good politicaleconomy thereby influencing the growth and development of a country in apositive manner and vice versa. There is a very high correlation between theeconomic development of the economy and its political economy.
The Covid-19 made a downfall in alleconomic and political activities in almost every economy (affected ones inparticular) and for that matter, every economy must embark upon the journey ofundertaking a series of development and welfare activities in order to improvethe standard of living and quality of life of its citizens alongside bringpositive changes in the economy. The role of the political economy cannot beneglected in the phase of shocks and disturbances such as COVID-19. In addition,we cannot deny its role in as far as growth and development prospects of theIndian economy is concerned. From time to time, in the entire process of growthand development of India, it was the political economy that was all dominant inits functioning. Nevertheless, COVID-19 is beyond what is seen and observed andtherefore we argue that the political economy of India is very unstablenowadays because the growth and development activities have stopped and thisvirus, a pandemic as declared by WHO, put a halt at almost all political andeconomic functions. In this difficult situation, the benefits accruing from themeasures taken by the government such as lockdown activities have not generatedthe desired outcome. Hence, strategies under COVID-19 have failed to reduce thenegative effects of the virus and bring about a positive change in thedifferent aspects of lives of the people in general. It thus puts a bigquestion mark on the role of the state in COVID-19 and accordingly raise thequeries and concerns regarding the political economy of the country too.
Everywhere there is panic due to COVID-19and people are affected in all ways. Health and social relations are impactingpolitical and economic relations too which necessitates political economy tothink in terms of power relations too. According to Raju Das (2001) ''Economicprocesses are everywhere political in that in order to operate they requirepolitical considerations.'' Since Covid-19 is full of economics and politics,therefore, it is not wrong to argue that COVID-19 is also influenced by factorsthat are political and economic. Also, political processes and decisions areinfluenced by factors and processes that have their roots in the economics ofCOVID-19. In the present times, all major processes (political in particular)are driven by COVID-19 implying that all major processes and political actionexpands as and when COVID-19 expands. It is high time to understand the factthat we can't separate political processes and economic processes at all timesespecially during war, disturbance, or calamity. In view of that, need of thehour in COVID-19 is to bring a good political economy (a good mix of politicalpower and economic power) so as to reduce the COVID-19 shocks to the Indianeconomy. In fact, such shocks are characterized by fast-tracking inflation,unmanageable fiscal deficit, large government regulations, and protectionism(inward-looking trade and investment policies).
Recent history is witness to the fact thatgrowing globalization and international trade yields uneven influence acrossdomestic sectors. Then it means we may approach protectionist policy thatsomehow maintains our domestic sectors. And under COVID-19, governments aremoving towards protectionism but it should be rational. Let us explain it withan example. A country, say X, in which there is rational protectionism shouldinteract with those countries in which there is the same rational protectionismand hence it will get greater benefits. Some countries think that protectionismis not good but we need to think such a policy in terms of its domestic ornational importance for it allows the government of a country to boost domesticsectors by imposing tariffs or else limiting foreign goods and services. Theeconomic depression that the world is moving towards questions the trade policyand therefore the economies and the trading participants must take into accountrational expectations regarding the benefits of protectionist trade policies.But, then again we have to rely upon the proper distribution of political andeconomic powers in the world (proper political world economy).
In COVID-19, it is very important tounderstand and bring into practice the four strategic areas of interconnectionbetween polity (governance) and economy (economic development) as identified bythe Asian Development Bank. These areas are accountability, participation,predictability, and transparency. Such understanding is very important formaintaining the political economy of a country under the time of crisis.Any policy to be effective must be accountable, participatory, predictable, andtransparent. Our economists and policymakers need to realize that COVID-19polices demand such characteristics for maintaining the political economy ofour country in the long run and taking the economy out of depression.
Binish Qadri ICSSR Doctoral Fellow pursuing Ph.D. in Economics at Department of Economics, Central University of Kashmir.
Aamir Jamal Research Scholar pursuing Ph.D. in Economics at Department of Economics, Central University of Kashmir.