Generally, helicopter money refers to quantitative easing policy by the central bank to ensure more liquidity in the system. “There are some people who now say that it may not be as bad as it has been forecast and there are signs that we may not have economic contraction (of) 9.5 per cent or 10 per cent that we thought about,” he said. According to him, recovery in August and September was quite smart, and it has been witnessed across many high frequency indicators.
“I think this third quarter, we will see smaller contraction (in economic growth) than had been forecast and fourth quarter could well be a wash if not a small positive. “So if that is true, then, I think we might end up with a contraction, which is lower but nonetheless contraction itself is very unprecedented thing,” he said.
The Reserve Bank of India has projected the Indian economy to contract 9.5 per cent in the current fiscal while the International Monetary Fund (IMF) and the World Bank have estimated contraction at 10.3 per cent and 9.6 per cent, respectively. Kumar also said the next stimulus should focus on short-gestation infrastructure projects as it will have a strong multiplier effects and can sustain growth. “There are enough productivity enhancing expenditures which can be rolled out in a relatively short span,” he said.