Policymaking as usual does not suffice for periods of transition

Economic thinking across the world must look beyond the certainty of numbers in uncertain times

- DEEKSHA SUPYAAL BISHT & MEERA UNNIKRISHNAN

As India steps into its Amrit Kaal, the world appears increasingly uncertain and fraught with unknown unknowns. While global challenges require nimble course correction, they must not deter us from aiming high and using the window of opportunity that India has got. In this context, economic thought needs to tune itself to India's aspiration of becoming a developed economy by 2047 in the backdrop of a fluid global situation.

Here's what may need the engagement of economic policy thinkers.

First, as the world embarks on a new wave of technological evolution, we need policies to be devised that curb the widening of inequality it would bring. From drones to driverless cars, technology must remain an instrument in the hands of well-informed humans. We are functioning at a time when, unlike computer scientists, economists must use their humanness to navigate the era of machine learning.

Second, while science is mostly studied in controlled environments, economists make their predictions in a rapidly changing world. Therefore, good economics is an art of designing policies that reduce the impact of uncertainty. We are facing heightened levels of it. Globally, firms have resorted to friend-shoring and re-shoring their supply chains to mitigate risks arising from geopolitical uncertainty. Policymaking under such uncertainty requires the provision of calibrated short-term buffers on the basis of high-frequency data and policies designed for the long-term.