What is helicopter money?

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News:Telangana Chief Minister has suggested RBI to adopt the concept of Helicopter Money to help state governments tide over the current crisis and kickstart economic activity in India.

Facts:

  • Origin: The term Helicopter Money was given by American Economist Milton Friedman in his paper “The Optimum Quantity of Money”.
  • Helicopter money: It refers to an unconventional monetary policy tool which is aimed at bringing the economy back on track by printing large sums of money and distributing it to the public.
  • Benefits: a) Increase in Demand Growth b) Increase in inflation among others.
  • Challenges: a) It may lead to Hyperinflation b) Devaluation of currency among others.