No plan to print currency notes to tide over crisis: FM Nirmala Sitharaman

Many economists and experts have suggested the government to resort to printing more currency notes to support the economy

India will not print money to soften the blow on its pandemic-battered economy and it firmly believes the support given in the form of “Atmanirbhar Bharat” has placed the economy on the path of recovery from the second half of the financial year 2020-21 that ended in March.

Finance Minister Nirmala Sitharaman told the Lok Sabha in a written reply that there is no plan to print currency to tide over the crisis. To a question on whether there is any plan to print currency to tide over the crisis, the finance minister said, “No”.

Many an expert including Nobel laureate Abhijit Banerjee have suggested that India should print money liberally and transfer cash to the sections of society that needs it more.

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"The fundamentals of the economy remain strong as gradual scaling back of lockdowns, along with the astute support of Atmanirbhar Bharat Mission has placed the economy firmly on the path of recovery from the second half of FY 2020-21," Sitharaman said in her reply.

The government had announced a special economic package of close to Rs 29.87 lakh crore under "Atmanirbhar Bharat" to combat the impact of the pandemic and bolster employment last year.

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The proponents of printing money to help Covid-ravaged economy and give a push to demand-constrained economy also include former finance minister P Chidamabaram, who recently said that it was not the time to think of rising fiscal deficit when the country was in the midst of the pandemic and people were losing livelihoods at a faster pace. The government must support its expenditure by printing money in the extraordinary times like the current pandemic, he had said.

Former CII President Uday Kotak too had suggested that India needed to print cash to support the economy hit by Covid-19 crisis.

Printing of money, which is also called monetisation of the deficit, happens when the Reserve Bank of India buys government securities directly from the primary market to fund the government's expenditures.

Printing of money gives a boost to consumption of goods and services in a demand-hit economy but in turn also causes inflation. Economists suggest amount of money in circulation should be in line with the economic output of a country.