Should India print more money to boost economy?
NEW DELHI: The Covid pandemic has ravaged lives & livelihoods across India. The periodic lockdowns since March of 2020 have taken a toll on several sectors. The promising signs of economic recovery after the first wave ran into a brutal second wave and a fresh round of curbs. As a result, there have been a raft of downgrades in growth estimates.
Against this backdrop, there have been calls from sections of India Inc for a large fiscal stimulus, including printing money, to nurse the economy back to health and help sectors flattened by the vir s. TOI spoke to a cross-section of experts — former central bank governors, bankers and economists — to get a sense of whether printing money is needed to get the growth engines roaring again.
While there are concerns over an adverse impact on India’s sovereign ratings, given the severe hit across sectors, it may be time to set aside those fears for the moment and focus on taking every possible step to put the economy back on track, at the earliest…
Monetary expansion already happening
- By C Rangarajan
There is no doubt that go nment expenditure has to remain high. The actual stimulus is a consequence of the level of deficit that is being maintained. The Budget indicates a deficit of 6.8% for the Centre. The states will have another 4%. So, the Centre and states’ combined deficit will be around 10.8% of the GDP. The expenditure as a result of the Covid pandemic will see the Centre’s deficit exceed 6.8% and it could be 7-8% of the GDP.
The go nment has assumed a nominal income of 14.4% for 2021-22. Given the lockdown, it will be around 13.4% — 1 percentage point less. The gross tax revenue that has been assumed is unlikely to be met. Non-tax revenues will also be low despite the dividend from the RBI. So, the fiscal deficit of the Centre will be 7-8% of the GDP.
政府假设2021-2022财年的名义收入为14.4%。考虑到封锁，收入将减少至13.4% - 下降1%。假定的税收总额不太可能实现。尽管有来自印度储备银行的红利，非税收入也会很低。因此，中央的财政赤字将占GDP的7-8%。
This level of fiscal deficit will require large borrowing by the go nment with the support of the RBI. So, in a way, monetary expansion I think is already happening in an indirect manner. The RBI is also pum in huge amounts of liquidity through various operations. Expenditure is being supported by the borrowing with the help of the central bank. The RBI will have to watch out for the impact of liquidity on prices.
The expenditure of the go nment will need to be expanded to increase healthcare infrastructure. It will also need to be for vaccination. The Centre has provided Rs 35,000 crore in the Budget for vaccination and that figure will need to be doubled and, third, if lockdowns extend beyond June, funds may be needed to support vulnerable groups and the poor. Besides, there will be expenditures to stimulate specific sectors. All of this could be something in the range of Rs 2 lakh crore, or 1% of the GDP. This could call for some amount of adjustment of other expenditures. Vulnerable groups can be supported by way of some cash transfer through appropriate mechanisms.
Every Child thinks that way, print more Money and make everybody Rich.
It is good idea. Print as much currency nes as possible atleast first clear the dues of 15 lakh in every one's bank account as promised so there is b chance for new mandate in 2024.
India fast becoming another Zimbabwe
people should know that the shameful leaders of Congress, who now accuse Modi of spoiling the Economy of the country
India's GDP is also fallen like Indian media.
Not only India, it is worldwide.
print more money but only for development and not for filling swiss banks of po iticians.
Everyone talks about the poor from April 2020. But nobody talks about the self employed and middle class. They are the ones who need to be looked into first.
Why not, in the last 7 years everything else is gone.
India has enough currency, increase the bank deposit rates & the coffers will be full in no time.
USA has printed money already for entire world, that's why stock and real estate market is UP. that money will flow in different industries, India don't need to print any money
Small businesses and middle class have lost fa th in the current administration and are holding on their savings or whatever is left of those. The economy improves when people spend money and middle class and small business owners are not in the mood to spend money on discretionary (non-essential) items; unfortunately it in turn hurts them as they are part of this economy.
Uncock every thing, let mild co ption run, increase sries, alow 25 percent of black money to be in market . Dont count covid cases, Dont test, let the death to depart.Everything will be in order by itself.
It is wise advice. Let PM decides what he want
Money is just a number with the promise that go nment would honour. Why print it? Just put the number equal to the sry/ support money in the digital wallets and make it compulsory to be used for digital transactions only. It's faster and easier that way.
All these experts instead of talking News Papers should talk to the decision-makers through proper channels.
India is moving in to 5 trillion economy and should adopt & ratify minimum corporate tax policy at its earliest to enhance its bottom line.
printing currency even won't help.
India soon will be another Somalia!!
A bunch of idiots and clowns at the centre ruling this nation. Kick them out and handover this country to experts in finance and administration to retrieve the situation.