Understanding Helicopter Money in the simplest possible terms

Bengaluru: Helicopter Money refers to a government asking its central bank to print more notes with an endeavour to distribute it among the public and increase their purchasing power. It doesn’t mean a helicopter gets airborne and drops notes for people to collect. 

On April 16, you all would have come to know of a private Kannada channel being issued a notice for sensationalising and exaggerating, perhaps even lying on the concept of what is called Helicopter Money. 

Well, it was American economist Milton Friedman who first coined this term. 

In simple terms, it means printing a lot of notes under the direction of the government. The government instructs the central bank to print the notes and distributes them to the public. But why? Well, it is done with an endeavour to increase the purchasing power of the common man and extricate an ailing economy. 

And what has helicopter got to do with it? 

Well, in simple terms, it refers to sudden dumping of notes, similar to airdropping stuff in emergency situations. 

It is also interesting to note that it was Telangana CM Chandrasekhar Rao who first suggested using Helicopter money to distribute cash to the people. 

Rao said, "To counter (economic crisis) this we need a strategic economic policy. RBI should implement quantitative easing policy. This is called Helicopter Money. This will facilitate the states and financial institutions to accrue funds. We can come out of the financial crisis. Release 5 percent of funds from the GDP through Quantitative Easing Policy.” 

Times are indeed tough. All thanks to the virus spread, economy has hit the nadir. Countries across the world are struggling to improve the comatose economy. 

It is precisely this reason that Helicopter Money is being discussed. 

But as per our knowledge, a helicopter doesn’t get airborne and distribute cash, as many think and depict it to be. 

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