In a bizarre demand made by a troll masquerading as a journalist, Aunindyo Chakravarty stated in Ravish Kumar’s show on NDTV that since the demand is sluggish, the government should arbitrarily print money and distribute it among people to revive the economy.
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Shedding all fundamentals of basic economics, Aunindyo absurdly compared a democratically elected government to a family saying, “Government should think itself like a family. The family, however, spends according to its income. But, the family doesn’t print money notes, the government does it. Many economists will rubbish my proposal but it is darn effective. The government should print money notes and distribute among people. For example, the demand in the auto sector is down by 30-35 per cent. People don’t have money to buy goods. The government should stimulate the demand for goods by printing notes and hand it to the people for buying commodities.”
Throughout this balderdash by Aunindyo, liberal blued eyed boy- Ravish Kumar, who was recently awarded the Ramon Magsaysay award, continued to approve Aunindyo’s pronouncements without raising any question either on logical applicability or financial feasibility of his proposed measure. However, increasing the circulation of money in the economy is not as facile a task as Aunindyo and Ravish claim it to be.
Firstly, the money printing in India is controlled by the Reserve Bank of India which manages the monetary policy of the country. Increase or decrease in the currency in the market is strictly monitored by the central bank. Section 22 of the RBI act, 1934, invests power in the central bank to manage the financial stability of the country by authorising it to supervise printing money. The Indian government is solely responsible for minting coins and deciding the design, denominations and security features of the notes.
When the entire left-liberal ecosystem is criticising the RBI’s decision to transfer its surplus money to the central government, they want the Indian government to force the Reserve Bank to print more banknotes. By making this proposal, Chakravarty suggests that RBI should forget its currency policy and just start printing banknotes on the orders of the government.
Secondly, there are intricate complexities that the Reserve Bank of India and the finance ministry of India has to be cautious of before proceeding to casually print money. A transient stagnation in the economy due to global blues doesn’t necessarily warrant a sudden urge to flood the country with banknotes. In fact, haphazardly decided to move to increase printing of money bills can backfire and be catastrophic for the economy.
Randomly taking the decision to augment printing of money bills can give rise to two major problems-Inflation and depreciating the value of rupee against the US dollar. A sudden increase in the currency will spark inflation as prices of goods will increase because of the excess supply of money in the market. An excess supply of currency in the market also triggers devaluation of rupee against the US dollar as the rupee will be easily available in the market. Such an experiment will have catastrophic consequences on the Indian economy, far from spurring growth. This kind of measure was followed in Africa and Germany and both witnessed hyperinflation.
However, such profundities are lost on Magsaysay winner Ravish Kumar and a troll masquerading as journalist Aunindyo Chakravarty who have a sole agenda of finding faults in the government’s approach and sermonise them with their limited financial knowledge. Decisions of such substantiality are taken after evaluating the complex macroeconomic and microeconomic situation. Suggestions like these make one question the already tainted credibility of Magsaysay winner Ravish Kumar and Aunindyo. The Indian government and economy will do good by not paying heed to their gratuitously disastrous suggestions.