Rao’s Proposal To Use Helicopter Money

CM K Chandrasekhar Rao on Saturday advocated the use of “helicopter money” to tide over the present lockdown-induced economic crisis in the country. During PM Narendra Modi’s videoconference with the chief ministers, Rao suggested that the RBI should adopt the Quantitative Easing Policy.

Helicopter money (helicopter drop) is a method of increasing the number of currency notes and pumping more money into the market. The money will be distributed among citizens, private institutions, State governments, and others.

Easing Policy, the RBI allows States to raise bonds for longer periods, buy back bonds from the State governments and even print extra currency notes and generate ‘helicopter money’, which would increase the purchasing capacity of individuals, sources explained.

During his interaction with the Prime Minister, Rao said that there was an economic crisis in the world after a Spanish Flu gripped the world in 1918 and when there was an economic slowdown in 2008, the world suffered a lot and recovered. “Similar economic problems have surfaced now. We need a strategic economic plan to overcome the present crisis,” Rao suggested to Modi.

‘Enhance FRBM limit to allow us to raise more loans’ Chief Secretary Somesh Kumar and Principal Finance Secretary K Ramakrishna Rao too were present along with the Chief Minister during the PM’s video conference.

While suggesting that the Centre should release 5% of the GDP through Quantitative Easing Policy to the states, he also urged the PM to enhance the Fiscal Responsibility and Budget Management (FRBM) limit from the present 3% of 5%. “It will allow States to raise more loans,” sources said. Rao also wrote a letter to the Prime Minister in this regard.