If there is no money, bromide is free.

"On 12 May, in an address to the nation, Prime Minister Narendra Modi announced an economic package worth 10% of India's GDP." "The lack of fiscal push surprised not just commentators but even markets," wrote Roshan Kishore. "The fiscal impact of the Rs 20-lakh crore (Rs 20 trillion) economic package stands at only Rs 2.14 lakh crore or just 1.1 percent of GDP and not the 10 percent of GDP, as much of the government support is in the form of credit guarantees or additional credit lines, having minimal impact on government finances, said the report by India Rating on Monday." A point made by SA Aiyar, who wrote that Modi should ignore the threat of a credit rating downgrade and say, "So, I have decided to boldly expand the fiscal deficit by 5% of GDP to help needy people and enterprises. RBI (Reserve Bank) will print the required sums." The growth rate of India's GDP has been falling for three succeeding years, starting from 2017-18 which led to a fall in demand, wrote Kishore. The government's policy response until 2019-20 was largely a supply side response but this did not result in increased investment because demand remained flat. Demand comes from three sources: "domestic consumption, exports and investment". Exports are not going to rise because of protectionism and the shock of the pandemic and companies will not invest unless there is a demand for their products, as shown by low capacity utilization. So, demand must come from domestic consumption. But, "Consumer confidence has collapsed amid the coronavirus pandemic and it may result in contraction of the economy by 1.5%," said a report by the RBI. Household spending as shown by "Private Final Consumption Expenditure has had a share of almost 60% of India's GDP in the recent period" and "An analysis of 2011-12 NSSO (National Sample Survey Office) data (latest available figures) shows that almost half of it came from the top 20% of the population". This 20% may reduce spending and start saving more due to the uncertainty created by the virus. So, "There is merit in focusing on the bottom 80% of the population" who spend all they earn because "at least half of India's population spend half of its budget on food". "Sadly, GoI (government of India) seems to be a prisoner of its own fears. Rather than let fiscal policy take the lead, it seems content to shoot over RBI's shoulder, seemingly impervious to both theory and practice when it comes to the right fiscal-monetary mix in a downturn," wrote Mythili Bhusnurmath. Trouble is, India's fiscal deficit may have risen to 7.2% in the last financial year, ending 31 March, which includes just one week of the lockdown which started on 25 March. "Economists are now pegging the fiscal deficit of the central government at 5-6%," wrote Aparna Iyer. "The government plans to bridge the fiscal deficit by borrowing more money this year." wrote Vivek Kaul. "On 8 May, it said it will now borrow Rs 12 trillion  to finance the fiscal deficit." "This is debt that someone will have to pay in the years to come." The government cannot force people and business to spend more by borrowing, so will it borrow more to spend more? Better to mouth bromides.