The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) concluded its first meeting of the 2026 calendar year on February 6, 2026. In a move that largely aligned with financial analyst expectations and the fiscal direction set by the Union Budget 2026-27, Governor Sanjay Malhotra announced a status quo on the key policy rates. This article provides a comprehensive deep dive into the RBI Monetary Policy February 2026 , exploring the rationale behind the decision, revised GDP growth forecasts, inflation outlook, and what this means for the common man’s EMIs and the broader Indian economy. The Headline Decision: Repo Rate Remains Unchanged The MPC, led by Governor Sanjay Malhotra, voted unanimously to keep the policy repo rate at 5.25% . This decision marks a pause following a series of aggressive rate cuts throughout 2025, which saw the repo rate drop by a cumulative 125 basis points from its peak. By maintaining the status quo, the RBI has signaled a "wait-and-watch...
Today, due to Coronavirus, the call of the
global recession has started in the whole world. The biggest reason for this is
a large number of cuts in jobs. Due to this, the purchasing power of the people
has decreased, due to which the demand is falling in every sector of the
economy and as a result, the economies are seen getting stuck in the recession.
Many financial measures are taken by the government to remove the economy from
the state of this recession, which is called fiscal and monetary measures. One
of these monetary measures is Helicopter Money by which the economy is
prevented from getting caught in the recession.
What is Helicopter Money?
The term Helicopter Money was first coined by
economist Milton Freedman in 1969. This means that the Reserve Bank will print
the money and give it directly to the government so that it can distribute it
to the public so that people can meet their basic needs with this money.
It is symbolic like pouring money from a
helicopter because the public did not expect this unexpected money and has come
directly to their account as if it had fallen from the sky. Helicopter Money is
used with the intention of getting a struggling economy out of a deep recession
or can also be used to avert a recession.
Taking steps in this direction, some state
governments and the central government have sent money to the accounts of the
people. Telangana CM KC Rao said that helicopter money can help states to come
out of the tough economic front. He said that the Reserve Bank should spend at
least 5% of the country's GDP through Quantitative Easing (QE) so that the
purchasing power remains in the hands of the people. The Uttar Pradesh
government on April 10 transferred Rs 1,000 each to the bank accounts of
4,81,755 daily labourers, including street vendors and rickshaws. Similar
financial assistance of Rs 5000 thousand has been given by Delhi government to
every auto, taxi and e-rickshaw drivers of the state. About 8 crore
beneficiaries of the Ujjwala scheme will be sent Rs 5,000 crore to their bank
accounts to buy LPG cylinders for three months. These examples show that the
government has spent money on people.
Is Helicopter money the same as Quantitative
Easing?
Under chopper money, the country's central
bank first prints note on a large scale and give it to the government and the
government further spends it on the people. The money given under helicopter
money does not have to be refunded to the central bank by the government.
Whereas under quantitative easing, the central bank prints the notes and gives
them to the government, but the central bank buys government bonds only when it
gives money to the government. Later, the central government has to buy back these
bonds and return the money to the Reserve Bank.
Is Helicopter Money Good for Economy?
Due to chopper money, the supply of rupee
increases in the country's economy, due to which inflation increases, that is,
the value of the country's currency is reduced. If the government leaves about
Rs 11 lakh crore in the economy to deal with COVID 19, then a huge amount of
money will be supplied in the market which will further create a crisis for the
poor for whom this money can be put in the market today. Used to be. Therefore,
Helicopter Money drop is a double-edged sword and the government needs to use it
carefully.
Examples of helicopter money
If a country's economy grows at a slow pace or
does not develop at all, it can consider helicopter money. In 2016, for example,
Japan considered using helicopter money to accelerate its country's slow
growth. Financial markets showed decision-related, as participants feared
hyperinflation and currency devaluation. Therefore, the Bank of Japan (BoJ)
opted for an alternative way to increase monetary supply. This included
different types of partnerships and purchases such as government bonds,
infrastructure design and payments to low-income people.
Benefits of helicopter money
It does not rely on increased borrowings to fuel
the economy to keep the engine running, meaning it does not generate much debt.
It increases spending and economic growth more effectively than quantitative
easing because it increases aggregate demand.
Issues with helicopter money
Helicopter money does not include repayment
liability, so many experts argue that this is not a possible solution to revive
the economy. This could increase inflation. It can devalue its currency in the
foreign exchange market.
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