Former Governor Raghuram Rajan has been suggested by the Reserve Bank to monetize the government to an extent to save the economic health in the current 'extraordinary circumstances'. Monetization is usually seen by RBI linking notes to printing. Rajan has suggested this at a time when the government is trying to raise funds to deal with the impact of Coronavirus on the economy.
In this series, the government has increased the limit of borrowing from the market by 54 percent to Rs 12 lakh crore during the current financial year. Rajan has written in a blog post that 'the government should worry about the health of the economy and spend money on essential things. However, these efforts should be spent on priority basis and reduce unnecessary expenses. '
In a blog post titled 'Knight game changer nor catastrophe in urban times', there is considerable concern in some circles that the central bank is printing notes to make up for the huge budget deficit. At the same time, some people feel that the central bank is not taking enough steps.
The perceived monetization in difficult circumstances is neither a game changer nor a big catastrophe." This may help a little, but it cannot solve the financial problems of the Government and neither will the inflation rate go up. If it is used incorrectly, it can be problematic. "
