Helicopter Money - an unconventional solution for the impact of COVID-19 on the economy - Acuité Ratings

Karan Mehrishi, Lead Economist at Acuité Ratings & Research

"We believe that 'black swan' events like the worldwide outbreak of Covid-19 call for unconventional solutions such as cash infusion in the economy commonly referred to as helicopter money. While the modalities of the cash infusion has to be well thought out, it can pull up private consumption and can give relief to micro and small enterprises in the short run. If the RBI expands its asset side through bond purchases, it may adjust its liability side by increasing currency in circulation by simply printing more money. This additional cash can then be distributed to small businesses or even vulnerable individuals like daily wage earners as a one time exercise. This however, is inflationary and needs to be calibrated well. Given the inflation currently under control, such a relief package may be explored."

Source : Equity Bulls

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