Who to stimulate and by how much?

"While the government's coronavirus stimulus package is still a work in progress, industry body Confederation of Indian Industry (CII) has stated that India needs a Rs 15-lakh crore (Rs 15 trillion) immediately to support poor and micro, small and medium enterprises (MSMEs)." As the MSME sector was "left weakened by the twin shocks of demonetization and a cumbersome goods and services tax in 2016 and 2017, the coronavirus lockdown of 2020 appears to have sounded the death knell for many", wrote an editorial in the Mint. While other governments have been providing vast sums of money for  economic stimulus, the Indian government has been dragging its feet, wrote Sriram Ramakrishnan. The US Congress has provided $2.5 trillion in direct payments to individuals and small businesses, while the Federal Reserve is buying bonds worth $3 trillion. "Four major problems have so far characterised GoI's (government of India's) fiscal response: incrementalism, over-reliance on bankers, undue fear of macro problems, and fear of optics over helping the well-off." Bankers are naturally worried about bad loans. "Companies that need credit are not getting it from banks, while loans are being offered to those who do not need it," wrote Shayan Ghosh. Loans are based on credit risk. "Most bankers have turned risk-averse and are happy to park their money with the Reserve Bank of India (RBI) even at a 3.75% interest." Incrementalism is not working and there is no need to be afraid of credit rating agencies. The government does not want to be seen to be helping the rich, but does it mean it should not help airlines or the leisure industry and the jobs that go with them? "Of late, there have been suggestions of imposing a one-time Covid-19 relief cess and/or a wealth tax on India's super rich population, as this segment is believed to have a higher obligation towards ensuring the larger public good," wrote Siddhartha Sanyal. Trouble is, public sector employees are some of the most highly paid and so have to pay more, while nearly 90% of workers, an estimated 450 million, lead a precarious existence in the informal sector. 52 out of 70 members of Delhi Assembly are multi-millionaires, as are 475 out of 542 members of the Lok Sabha elected in 2019. Not easy to tax one's own, but raising taxes on fuel and alcohol is easy. "Central and state governments, starved of revenue due to nationwide lockdown, are increasingly resorting to fuel tax hikes to capture most gains from global oil crash that began in early March, leaving little benefit for customers." The base price of petrol is Rs 17.96 a liter, while the tax on it is Rs 49.42, wrote Vivek Kaul. The Delhi government has imposed an extra 70% coronavirus tax on alcohol. Hard drinkers will buy at any cost, despite loss of earnings, thereby putting their families in greater danger of penury. If casual and recreational drinkers, who tend to buy more expensive brands, refuse to buy at these prices the move will be self-defeating. Tax repression instead of stimulus. Not what the economy needs.