Effectiveness of public policy in reviving the COVID‐19 hit economy: Evidences from Kerala, India

• Published date: 01 December 2022
• Author: Chakkungal Mohammed Kasim,Parambengal Azad,Eanthen Muhammed Refeque,Kizhayoor Maya
• Date: 01 December 2022
• DOI: http://doi.org/10.1002/pa.2794

RESEARCH ARTICLE

Effectiveness of public policy in reviving the COVID-19 hit

economy: Evidences from Kerala, India

Chakkungal Mohammed Kasim

1

| Parambengal Azad

2

|

Eanthen Muhammed Refeque

3

| Kizhayoor Maya

4

1

Department of Economics, Farook College

(Autonomous), Kozhikode, 'Kerala', India

2

Department of Economics, MES Kalladi

College, Palakkad, Kerala, India

3

CEO, Straightpath Group of Educations,

Malappuram, Kerala, India

4

Department of Economics, Christ University,

Bangalore, Karnataka, India

Correspondence

C. Mohammed Kasim, Assistant Professor,

Department of Economics, Farook College

(Autonomous), Kozhikode, Kerala 673632,

India.

Email: kasimeco@gmail.com

The economic crisis triggered by the COVID-19 urgently required active policy interven-

tions to enhance the revival strategies of the world economy. This paper examines the

effectiveness of policy intervention of the State Government of Kerala in India in miti-

gating the risks caused by the pandemic. The policy effectiveness is evaluated by analyz-

ing the data collected from a sample of 300 beneficiaries with the help of descriptive

statistics, ordered probit (OP) model, and semi nonparametric extended OP (SNEOP)

model. Our results are assertive with the fact that state policies are effective in reviving

the crisis-hit economy as they have primarily helped low-income groups and other mar-

ginalized communities. The majority of BPL families, self-help group members, and social

security beneficiaries rated government policies as highly or fairly effective. Though the

policies are found to be highly effective among those who have suffered income loss,

the study does not find sufficient evidence to believe that the government interventions

are effective in helping those who have lost their jobs. The level of effectiveness is

inversely related to age, education, and family size. Our results suggest that an extensive

fiscal package is required to help people recover from the crisis.

KEYWORDS

COVID-19, effectiveness, Kerala, ordered probit and semi nonparametric extended OP

models, public policy

1|INTRODUCTION

John Maynard Keynes's advocacy for government intervention

through public policies was a revolutionary chapter in economic think-

ing as it overturned the then-prevailing idea that free markets would

automatically bring about economic stability. Historically speaking,

when the great depression wrecked the world economy in an unparal-

leled way, fiscal policies, as proposed by Keynes, were effectively put

in place to revive the economies. This was followed by a surge in dis-

cussions by Keynesian economists who argue that government inter-

vention is necessary to stabilize the booms and busts in the economic

activities (Aspromourgos, 2012; Jahan and Mahmud, 2014). Thus,

government intervention started to be seen as an integral element of

revival mechanisms for the economies plunged into crisis.

The world today is on yet another battlefield fighting COVID-19

and resultant economic crises of various sorts. Beginning from

24 March, 2020 India witnessed a nationwide lockdown for 68 days

till the end of May, which ultimately caused an unprecedented economic

crisis. The pandemic has already affected the lives and livelihoods of mil-

lions of people by causing them to lose their jobs, income, and welfare.

Considering the magnitude of the shocks triggered by this pandemic and

consequent closure measures, especially in the labor market, some stud-

ies prove that job losses ensuing COVID-19 are larger than the entire

effects of the Great Recession (Montenovo, 2020;Coibionetal.,2020).

In such a precarious state, effective execution of policies and interven-

tions from the part of governments is inevitable. Realizing this, govern-

ments around the globe are bent on formulating various initiatives to get

the economies out of chaos.

Received: 16 May 2021 Revised: 18 September 2021 Accepted: 2 November 2021

DOI: 10.1002/pa.2794

J Public Affairs. 2022;22(Suppl. 1):e2794. wileyonlinelibrary.com/journal/pa © 2021 John Wiley & Sons Ltd. 1of9

https://doi.org/10.1002/pa.2794