Can Helicopter money be the solution to revive the Indian economy?

🗔July 2, 2020
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The Coronavirus pandemic has taken over the world. There have been close to 6.15 million confirmed cases of the epidemic worldwide(as of 1 June 2020). To curb the cases globally, most governments decided to undergo a complete lock-down. It implied that only essential services were to work. Most offices, factories, and shopping malls had to close down until recently.

Most people were only buying essential products. Hence the economies of the world had a partial slowdown, if not a complete one.

Table of Contents

What is Helicopter Money ?

Let us first find out what the term “helicopter money” actually means.

“Helicopter money” as a term was coined by the American economist Milton Friedman and it meant “Dumping money inside a struggling economy with the intention to shock it out of a deep slump”. The reason it was termed as “helicopter money” is because the money was dropped by a helicopter. The practice was common during The Great Depression of 1929-30 in the United States.

(Source- economictimes.indiatimes.com).

Why Topic was in Light Now?

Pic From Affairs Cloud

This topic recently came into light when the CM of Telangana, K Chandrasekhar Rao mentioned that this policy can help revive the economy in the contemporary phase when the economies have already gone inside a slump due to the Covid-19 pandemic.

While the solution may be fine in the short term, its viability in the long term is a major question.

This kind of money will create dependence of the people on the same and people might not work in order to meet their expenses.

There Views on Helicopter Money

“There will be numerous consequences of helicopter money being distributed. But these initiatives won’t yield the desired result unless it does not reach the targeted people.These changes resort to more harm than good to the economy” says Namrata Nanavati, an aspiring Chartered Accountant based in Surat.

“With the kind of red tapism and political flaws, India cannot afford such a measure. So the government must resort to other alternatives than to resorting to helicopter money”further adds Nanavati.

“Printing of too much money by the central government will result only in inflation. It won’t benefit people in either ways. Due to too much supply of money in the economy, people will start spending more as a result of which, the price of a commodity will rise which won’t help us in any manner. It is not helpful for us” says Haris Rizvi, a senior accountant based in New Delhi.

“Helicopter money will depreciate the value of the Indian currency. Rupee is not stronger than any other currency hence printing more is not the solution” further adds Rizvi.

Some more Views

“Helicopter money is not in the best interest of the nation. In order to put more money in the economy, the governments can request the banks to reduce interest rates and give incentives to the industrialists” said a senior professor of Finance based in Surat.

“Any policy like this(Helicopter money)would result in the pampering of people and would handicap the economy even further.The industries do need support and the 20 lakh crore package which has been announced by the Prime Minister Narendra Modi is more efficient in the long run” said a prominent textile trader based in Surat.

“If the government needs to pump in more money into the economy, then they can distribute the resources to every person properly” says Rahmah Rizvi, a student of Finance based in Bengaluru.