'Helicopter Money' policy not feasible- Rajan

Dr. Raghuram Rajan while delivering a lecture at London School of Economics on Tuesday stated that 'helicopter money' policy may not be politically feasible and may not derive any economic benefits.  Dr. Rajan provoked a debate by asking whether the global monetary policy is a part of the solution; or is the monetary policy itself  increasingly becoming a problem. 

'Helicopter drop of money' is a metaphor used to describe an unconventional monetary policy that allows Central Banks to print money and distribute directly to the public. 

Such a type of monetary policy is yet to be adopted by any economy but the unconventional monetary policy has been discussed in order to foster growth in a negative interest rate environment, reflecting negative inflation.

Dr. Rajan had previously hinted that the government can adopt 'Helicopter Money'  policy as a last resort when the inflation starts turning negative.  However he quickly explained that the economic benefits may not be derived out of it as people may tend to save money rather than spend and this may not contribute to growth, thus defeating the whole purpose.

In current global economy , a lower interest rate related monetary policy is seen as the most effective way to boost demand.  However, Dr. Rajan has always maintained that lowering interest rate is no solution for curbing slower growth, as with lower interest rates people actually save more than they do spend.