With the Indian economy staring at the prospect of sharp negative growth, it is quite odd that the Centre should unveil an economic package that on closer perusal turns out to be a mere 1 per cent of the GDP, and not 10 per cent as claimed by it. The State Bank of India has in its Ecowrap newsletter pegged the actual size of the fiscal package at ₹2 lakh crore or 1 per cent of the GDP. It is not alone in arriving at such estimates. The Centre has totted up a figure of ₹20 lakh crore by egregiously lumping together fiscal and monetary measures, the latter being in the nature of credit guarantees and liquidity infusions into banks and other financial sector institutions rather than the economy per se . The notable areas of direct fiscal stimulus, as explained by the newsletter, are free rations and other relief measures under the PM Garib Kalyan Yojana (₹73,000 crore), ₹40,000 crore for MGNREGA, ₹12,000 crore for fisheries and ₹3,500 crore for food to migrants. The serialised press statements by the Finance Minister do not match up to the alarming crisis of lakhs of migrants desperately fleeing on foot to their homes, with many dying on the way. The package, by relying overwhelmingly on credit infusion to boost the economy, has failed to recognise that investment will pick up only when people across income segments have money to spend. For that they need to see an economy picking up and generating incomes for all, both immediately and over time.

The MGNREGA infusion of ₹40,000 crore may help in alleviating the distress of migrants when they return to their villages, but it does not measure up to the magnitude of the crisis. Above all, there is nothing specific for high job-creating sectors such as retail and hospitality, besides the general promise of cheap credit. The Centre has been over-cautious in opening its purse strings at a time when all economies have set aside their fiscal targets. It should borrow more and spend more, using future growth to repay the debts taken at low interest rates. There may not be a case for expanding the fiscal stimulus to 10 per cent of the GDP, as the Western economies have done, since the rupee is not a comparably strong currency, but a genuine fiscal infusion of ₹8-10 lakh crore, with an orientation towards cash transfers, infrastructure spending (including social infrastructure, which has been neglected) and one-time settlement of industry wages, is what the economy needs today.

While the Centre has reiterated its reform commitment with respect to privatising airports and mining, such steps must await the return of normalcy. Here too, it appears keen to flag its fiscal prudence amidst falling tax revenues — even as fighting depression rather than debt has emerged as a paramount concern globally.