Barbell Strategy And Agile Approach

Table of Contents

The Economic Survey 2021-22 sets out to explain the “Agile” approachthat informed India’s economic response to the Covid-19 shock.
This strategy was also tailored to India’s unique vulnerabilities to the pandemic.
- First, as the pace of spread of a pandemic depends upon network effects, a huge populationinherently enables a higher pace of spread.
- Second, as the pandemic spreads via human contact, high population density, especially at the bottom of the pyramid, innately aids the spread of the pandemic at its onset.
- Third, although the average age is low, India’s vulnerable elderly population, in absolute numbers, exceeds significantly that of other countries.
- Finally, an overburdened health infrastructureexposed the country to a humongous supply-demand mismatch that could have severely exacerbated fatalities.
Given the ‘black swan event’marked by sheer uncertainty and once in a century crisis, Indian policymakers followed an approach similar to the Barbell strategy in finance – hedging for the worst outcome initially, and updating its response step-by-step via feedback.

BARBELL STRATEGY

It is a common strategy used in financial markets to deal with extreme uncertainty by combining two seemingly disparate legs.
The Barbell strategy combines different safety-nets to cushion the blow on vulnerable sections of society or businesses. It entails a flexible policy responsebased on a “Bayesian updating of information”.
- In simple words, it uses real-time data to identify, realize and mitigate the risk.
It is essentially same as the widely-used ‘Agile’ frameworkthat uses feedback-loops and real-time adjustments. In an uncertain environment, the Agile framework responds by assessing outcomes in short iterations and constantly adjusting incrementally.

It is a framework for project and policy implementation that is considered highly efficientfor getting work done.
It was developed in 2001and is based on 12 principles which include customer satisfaction, collaboration, adapting to change, feedback loops, breaking project silos, etc.

What was the framework that India followed earlier?

India and most countries across the world typically follow the Waterfall Approach. This involves analysis of the issue, detailed planning and meticulous implementation. India’s earlier five-year plans were based on this.
Waterfall Framework is linearand is developed systematically from phase to phase.
It is said that this approach works best for projects with concrete timelines, well-defined deliverables and little uncertainties.

How did government put Barbell Strategy to use?

The intensity of Covid-19 pandemic called for a rapidly changing policy approach to cater to the needs of the people. The ever-mutating course of the virus made the Waterfall approach unfitto meet the needs of this unforeseen exigency.
Understanding the threat posed the virus, the government decided to shift from ‘Waterfall’ framework to Barbell strategy.
Hence, the government adopted the two pillars of supply side Barbell Strategywhere on one hand it focused on creating flexibility in the economy through deregulation and reforms, thereby allowing the economy to better respond to uncertainty. On the other hand, it focused on improving resilience through various measures like Atmanirbhar Bharat Abhiyan, PLI and more.

Measures adopted

The flexibility of Agile approach improves responsiveness and aids evolution, but it does not attempt to predict future outcomes.This is why the other leg of the Barbell strategy is also needed. It cushions for unpredictable negative outcomes by providing safety nets.
Hence the government announced multiple measures, especially catering to the poor and vulnerable sections of the society.
The survey said imposing stringent lockdownwhen cases were in March 2020 was the first step towards this approach.

Why is the Agile Framework preferred today?

Agile framework is particularly relevant todaybecause of the explosion of real-time data that allows for constant monitoring.
Over the last 2 years, government leveraged a host ofhigh frequency indicators (HFIs) from departments/agencies as well as private institutions that enabled constant monitoring and iterative adaptations.
Such information includes GST collections, digital payments, satellite photographs, electricity production, cargo movements, internal/external trade, infrastructure roll-out, delivery of various schemes, mobility indicators, to name just a few.
These HFIs helped policy makers tailor their responsesto an evolving situation rather than rely on pre-defined responses of a Waterfall framework.