Are we talking about direct stimulus payments like the $1,200 checks people got? If I understand correctly, the idea behind that is to facilitate any spending at all since that generates income for businesses. In other words, any spending is good spending regardless of whether it's productive. Without spending, the economy grinds to a halt.
Here in India, a lot of poor people receive similar handouts, both from the central government and from the state government. And in 90% of the cases, they spend this amount in alcohol and gambling.
I'm skeptical. You got a source to back that up?
Only a very few use it for essential activity. I hope the case is different in the United States.
The majority used the money for daily expenses like food and bills, and after that, housing and paying off debts. Unsurprisingly:
People in lower income groups were more likely to report using their checks to cover daily expenses than people in higher income groups.
https://www.cnbc.com/2020/09/04/americans-spent-their-stimulus-checks-on-food-and-utilities.htmlThis is also one of the reasons why a lot of people in India are against the idea of handouts. It will increase the tax burden on the middle class, and at the same time it will have no impact on the long-term welfare of the poor people.
Stimulus payments aren't intended to impact long term welfare, aside from the broad goal of preventing a prolonged recession or depression. And remember, any stimulus money that is spent at businesses is effectively a subsidy to those businesses. That's the entire point: to get income to businesses.
I can't speak to what India did specifically, but in the US anyone making less than $100K got a stimulus payment. So not only did the middle class receive a handout as well, but business owners doubly benefited when consumers went to spend the money.