‘CASES IN MANAGEMENT + 221 Should or should not the central bank drop ‘helicopter money' to stimulate COVID-19 affected economies? A dilemma B.Venkatraja Background ‘A sudden and unexpected external shock administered by super contagious corona virus disease (COVID 19) across the globe has caused a health emergency. Owing to its high velocity of transmission, national governments could do little but intervene with lockdowns and shutdowns. The experiences of most of the countries so far, are such that lockdown did little in controlling the pandemic, instead damay level of growth. Declining investment, increasing unemployment, rising poverty, widening itional insecurity, unaffordable health services, fast decreasing personal income and purchasing power are the visible impacts of the COVID 1g the economies heavily, irrespective of the economic inequality, growing food and nui pandemic during the initial six months. Realising the need to protect the ‘living! of the people along with the ‘life’, the countries are calling off the lockdown and reopening in a phased manner amidst intensification in the pandemic. With the beginning of unlock, the economic activities resumed in a few sectors and the growth is gradually gaining momentum. However, the consumption spending and aggregate demand continues to contract, and many countries are speculated to head towards a worst recession. If the national governments are working with fiscal stimulus to rejuvenate the ailing economies, the central bankers are complimenting with multiple conventional monetary policy strategies. The severity of the impact of COVID 19 con the economies is such that these efforts have been proved less fruitful as the industrial and national macro-economic outlook appear to be bleak as forecasted by IMF and other leading agencies, Since it is certain that the economic uncertainty will stay for long, neither the fiscal et Copyright © 2020 Shri Dharmasthala Manjunatheshwara Research Centre for — . | Management Studies (SOMRCMS), SOMIMD, Mysore. This case is published as @ SCMIMA — fartoreasesin Management Volume 3 (20207 with SBN 976-99-03300-48-2 The case writer(s) BVenkataa, Associate Professor - Economies, SOMIMD, Mysury may be reached at Venkatraja@smimd.acin Author(s) have prepared ths case asthe hosts for class discussion rather dnd a specie company. The case Is based on the Information avalible nthe public domaln, THs the permission of SDMRCMS, SOMIMO, Mysore. For Teaching Notes pease Corset sdmrems@semimd.ac in.222 « CASES IN MANAGEMENT stimulus nor the conventional monetary policies are feasible. The governments are concerned with the widening fiscal deficit, and the eventual sovereign debt crisis. If many central bankers already have either low bound or zero bound interest rates, a few others have kept them at negative zone. Even the quantitative easing measures are applied, and their repeated interventions are not feasible. Since, all possible measures have dried up, discussions and debates are brewing up on whether the time is up to the central bankers to drop ‘helicopter money’ as a last monetary weapon in containing the deflation and jump start the economies. Impact of COVID-19 on global economy ‘The pandemic has accentuated an unprecedented global economic crisis to the magnitude ‘that was never heard of in the post-world war Il period. more than half of the global population was affected by shutdowns and lockdown, nearly two-third were forced to maintain social distancing. Along with restrictions to intra-national movements, international boarders were also closed by the countries in the larger interest of national health security. This has affected domestic and international trade, and business travels as well. As assessed by Prof. Ricardo Hausmann, a noted economist at Harvard University and former chief economist of the Inter- ‘American Development Bank, business travels were contributing about 1.7% of the global GDP. The absence of business travels, keeping hospitality and tourism apart, according to Hausmann is anticipated to have serious repercussions on the advanced economies. This, in turn, has potential spill over effects on the emerging economies and the negativity goes global. With the time, the global economy is visibly contracting as being reflected in the sharp decline in the GDP and is evidenced from Figure-1. According to an IMF estimation, the global GOP did contract by 4.9% during June 2020 while, the growth contraction was 3% in April 2020.‘CASES IN MANAGEMENT + 223 a of 2 ° _ y E. 3 3 “30 5 st ms dan 2020 spr 2029 sane 2020 ‘Sc Nolen tot Figure-1, Global economic growth, 2020, (year on year percent change) The global growth projections of IMF for 2020 is very gloomy and it predicts a 4.9% shrink in the global economy. If the economic growth of advanced economies is predicted to reduce by 8%, the emerging and developing economies are set to face a 3% decline, Particularly, Euro area, USA, Latin America and Caribbean countries appear to be highly susceptible to the worst deflation and are heading towards recession (refer to Table-1). Though a recovery is predicted in 2021, its trajectory seems to be very low and is highly unlikely to reach the pre-COVID status (refer to Figure-2).224 « CASES IN MANAGEMENT Table-1. Global economic outlook (real GDP, annual % change) ‘Table-t. Global economic outlook (real GDP, annual % change) 2018 | 2039 | 2020" [20217 ‘World Output 36] 29! a9] 54 ‘Advanced Economies 22| 17| 30 United States 29| 23] -80 EuroArea 19| 13 | 102 | Germany _ 15| o6| 78 [France 18/15) 125 italy os| 03] 128 Spain 24) 2) 28 Japan 03] o7| 58 United Kingdom 13| 14] 102 Canada 2] 17[ 84 Other Advanced Economies 27] 17 | 48 Emerging Market and Developing Economies | 45 | 3.7| -3 Emerging and Developing Asia 63| 55| 08 China 67[ 61 1 india _ _ ea] 42) -a5 | ‘ASEAN s3a| a9] 2 Emerging and Developing Europe a2] 24 Russia 25| 13 Latin America and the Caribbean ail 01 Brazil a3] 41 Mexico. __ _ 22 | -03 | -105 Middle East and Central Asia 1s| 1] a7 ‘Saudi Arabia 24 | 03| 68 ‘Sub-Saharan Africa Z [32] 3a] 32 Nigeria [a9 [22 [5.4 ‘South Africa os) 02 & [Low-income Developing Countries sa] 52] 2 World Growth Based on Market Exchange Rates | 3.1] 24] -6.1 3 | World Trade Volume (goods and services) 3.8] 09 | -119 8 ‘Advanced Economies | 3.4 | 15| -134| 72 Emerging Market and Developing Economies |_4.5| 01| -94| 94 Note: * proje Source: IMF, World Economic Updates, June, 2020 nsCASES IN MANAGEMENT « 225 ‘Seas IMF, Ma eoncmic Otek; aed MF stl ealettons ote Daa 90 ou the fourth quarter af 071, As + udvanced centile EMOES «emerging made nd Arslopng esnoies, a CO = Cis Figure-2. Real GDP forecast, 2019-2021 (index, 2019 100) ‘The global production is severely affected from the absence of trade, shutdown of business and markets, labour migration, and closer of the industries. According to an estimate of IMF, the cumulative output loss to the global economy across 2020 and 2021 from the pandemic crisis will be over $12 trillion (Figure-3). It is pertinent to note that the entire supply chain for both global and local companies has got disrupted on a severe scale. Mike Wolf, an economist with Deloitte, takes note of some of the key issues facing global business and the supply chain disruptions, and strongly predicts their potential disruptive role in the long run revival of the economies. This is the reflection of the synchronisation of the downturn and amplification of domestic disruption in the world, As estimated by IMF, the trade around the globe had shrunk bby 3.5% during the first quarter of 2020 and is likely to slide further down as the countries do not appear to risk by removing the barriers to cross boarder movements in the wake of rising COVID 19 positive cases at exponential rates in several prominent countries of the world,226 » CASES IN MANAGEMENT 108 106 toe ee 100 °° % on 2018 aw 220 aon Soc, Wl nan bk a ul einen Figure-3. Projections of global cumulative output loss (global real GDP level, index) 2020 ‘and 2021. The protective measures against COVID 19 pandemic by the national economies across the ‘lobe and the consequent curtailment in economic activities have caused a catastrophic impact on the labour market as well. The Internat nal Labour Organisation (ILO) estimates the job loss during Q1 of 2020 as equivalent to 130 million full time jobs, while in Q2 it was predicted to be equivalent to more than 300 million. It also estimates that due to either full or partial shutdown, more than 25 million jobs were affected globally. Even after the reopening of certain sectors, the recovery in the labour market appear to be slow andis predicted to continue to be depressed in 2021 as well. The ILO projects that labourers in the informal sector are more affected than their counterparts in the formal sector as less skilled labourers do not have the option to work from home. In its advanced estimation, the ILO projects that out of 20 billion workers employed in the unorganised sector, 80 percent is affected significantly. The collapse of supply side of the economy has adversely affected the income and purchasing power of the individuals worldwide. This has compressed the consumption and created a negative aggregate demand shock. ‘As on November 14, 2020, India was the second worst hit country in the world from the COVID- 19 as the cumulative positive cases touched to 8.73 million and still has been growing at a rapid phase. The entire economy was on stand-stll in April and May, and was in partial shut down in the subsequent months. The IMF estimates a 4.9% contraction in India's GDP during 2020 over, the previous year. While the scenario appears even more deep-rooted when the Ministry of‘CASES IN MANAGEMENT « 227 Statistics and Programme Implementation (GOI) released the Qi (April-June) growth data of ‘the economy for the financial year2020-21 (Refer to Table-2). Manufacturing and services including constructions are severely affected. Due to shut down and lockdown, industry and construction sectors have turned sick, and investment fallen to record low. Consequently, unemployment increased to the peak in the past 40 years and the private consumption expenditure during Q1 has declined by a massive rate of 26.7%. The nominal GDP has its deepest contraction during this quarter by 23.9% Table-2. Sectoral Performance of India: 2020:Q1 Sectors % change in GVA “Agriculture, mining 127 Manufacturing _| $39.3 Services, including constructions 26.8 | Public administration, defence 10.3 Gross capital fixed formation 47 Private final consumption expenditure 26.7 GDP growth rate (nominal) 23.9 Source: Ministry of Statistics and Programme Implementation (GO!) Table-3. GDP growth rate of India Quarters 2019-20 Qi 2019-20 02 2019-20 03 2019-20 04 2020-21 QA *nominal GDP Fiscal stimulus as a containment measure to COVID-19 triggered economic downturn Countries were quick in responding to the pandemic triggered crisis and announced fiscal stimulus for the recovery. The fiscal packages broadly enveloped tax reliefs, rehabilitation of the affected population with food, shelter and clothing, unemployment allowances, cash28 » CASESIN MANAGEMENT compensations to different sections of the society based on the severity of the impact on them. Such fiscal measures are considered from the demand side of the economy. Governments of many countries have also supported MSMEs, corporates and business houses to mitigate the impacts on supply side. However, the fiscal stimulus involves a trade-off with fiscal deficit. itis a very dicey environment to the government as, on the one hand, its revenue collections have declined sharply, and on the other, have increasing fiscal commitments towards the society. The fiscal space is too narrow, but the governments cannot throw up the hand with helplessness, but are forced to borrow. It is such an unprecedented scenario that the global public debt is all set to exceed the post-world war-lI peak, as projected by IMF (refer to Figure- 4), finals Great 0 a ecto 10 i 300 - 80 oo 40 ~e 20 - mete ° ‘ mn ‘ vea0 1900920 194019601880 20002020, ‘cues Mistrial Pic Debt Osabase, MF, Wold Econo iso; MagsonDatzbase Pj and IME staff ‘oleatons Figure-4, Global public debt (% of GDP) Brazil is one of the worst hit counties from the COVID-19 pandemic and to combat the severity of the same on the economy, a series of economic packages worth 11.5% of its GDP was, unleashed. Measures include cash transfer to the economically vulnerable population, provision of employment, reduced taxes, immediate health care provisions, financing the states and municipalities to manage the pandemic and support SMEs and micro businesses with funding worth 1% of the GDP.‘CASES IN MANAGEMENT + 229 The rising COVID-19 cases in the EURO Area has severely affected its economy as it is reported by IMF that the real GDP has contracted by 15% and 14.4% in the first quarter and second quarter respectively. The European Council announced a fiscal package of 750 billion Euros i.e,, 6% of the area's GDP through borrowings. Countries got hit hard such as Italy, Spain, and Eastern European countries aré allocated with higher funds. Emergency health spending, financing banks, financing companies and SMEs are some of the highlighting stimulus measures, Japan also announced a massive fiscal support package at two phases. Each phase was amounting to 117.1 trillion Yen (worth 21.1% of GDP). The funds were earmarked towards supporting business, households, local governments, employment protection, and COVID pandemic related management. They include subsidy and subordinated loan support to the business firms. ‘The outburst of COVID-19 in the USA has contracted its growth and the change in 2020 appear to be -8%. This has forced the USA administration to release a fiscal package of @ mammoth size of 2.8 trillion dollars i.e,, nearly 13.5% of GDP. Overall, it includes loan relief to students, protect the interest of renters and owners, unemployment benefits, tax relief, financing small businesses, support to hospitals, support to medical infrastructure and hospitalisation India has ear-marked about 7% of its GDP towards reviving the flattening economy. If about 2% of the GOP is set aside for direct spending, remaining 5% will support business and other sectors. The direct spending measures will have immediate transfer to businesses, poor households, migrants and farmers, distressed electricity distribution companies, and farmers. Measures such as financing MSMEs and NBFCs, concessional credit to farmers and farming infrastructure, and credit support to street vendors expecting to stimulate business sector. Most of the countries designed their expansionary fiscal policy to suit to their domestic requirements and the depth of impacts created by the pandemic.230 « CASESIN MANAGEMENT Table- 4. Widening fiscal deficit in select countries _ Country March, 2020 | june, 2020 Brazil “52 “10.4 France 3.6 56 India “46 “61 Italy 23 “47 United Kingdom 46 22.6 United States 48 141 “Source: CEIC Data ‘The World Bank, the IMF and such other organisations predict that the economic slowdown will persist for years together and the revival will be slow. This raises a few fundamental questions as to how long and how much fiscal stimulus could be injected by the governments? ‘Whether such measures sustain in the wake of the resources of the governments getting exhausted? The governments are currently under tremendous fiscal pressure. With drastic ‘economic contraction, on the one hand the revenue mobilisation has flattened significantly and on the other, there is rising demand for fiscal stimulus. The direct impact is burgeoning fiscal deficit across the world and it is evident from Table-4. It denotes a substantial rise in the fiscal deficit of the countries like the USA, the UK, India, Italy, Brazil and France. The deficit financing requires the countries to resort into borrowings from the external sources. If the pandemic protongs, the countries cannot keep designing expansionary fiscal policy. Increasing sovereign debt will create even more structural problems to the national economies, as clearly evident from the debt crisis and subsequent collapse of Greece economy. The domestic economy being affected badly by the contraction, the government cannot dare to levy new taxes or increase the tax rates. The fear of further widening of fiscal deficit limits the fiscal stimulus measures though slowdown speeds up and hence they are not sustainable Monetary policy responses to COIVID-19 crisis The fiscal stimulus has been confronted with two critical issues. Firstly, they are insufficient to the scale of downturn. Secondly, their implementation involves time, and they will not be effective in the short run. For the immediate revival of the economy, monetary policies are more appropriate. In these pretexts, the central banks of the countries responded swiftly with monetary measures to revive the economies.‘CASES IN MANAGEMENT « 231 ‘The Central Bank of Brazil was quick in responding to the crisis and came up with measures lowering the interest rates and quantitative easing to the financial institutions. ‘The policy rate has been reduced by 225 basis points to a historic low of 256. Further, to increase the liquidity with the banking network, the reserve requirement has been lowered to 17% mixed from 25%, the provisioning rules are revised, the capital requirements are changed and private corporate bonds are now being considered as eligible collateral for loans to the financial institutions. Interest rate being already negative, the ECB of European Union does not have the luxury of lowering it further and hence focussed more on to quantitative easing and liquidity injections to the financial and banking institutions in the area. This includes announcement of two massive additional asset purchases worth 120 billion Euros and 750 billion Euros and grant of liquidity facility at the deposit rate, Several collateral easing measures such as permanent collateral haircut reduction of 20 percent for non-marketable assets will ease out the banks in raising liquidity. Banks are also permitted to operate with relaxed and reduced liquidity and capital requirements. Since Japan cannot further lower its interest rates as they are already at the negative zone, its Central Bank announced a comprehensive measure of quantitative easing and liq injections to the financial institutions and markets. This includes purchase of government securities, commercial papers, corporate bonds and exchange traded funds. Finances are provided to promote small and medium sized enterprises, and provision of interest free loans are floated to strengthen the sick units. Similarly, the Federal Reserve in the USA adopted similar measures to support households, financial institutions and busines units through lowering interest rates, quantitative easing and liberalised funding and credit flow provisions. In an historic step the Fed has reduced the policy rates by 150 basis points to bring them near-zero (0-0.25). In a bid to inject larger liquidity to the banks, term repos are expanded, and treasury and agency securities are now being bought. The Fed also introduced several new facilities to increase credit flows, in addition to relaxation in several supervisory and regulatory actions The RBI in India has announced a host of measures to allow more liquidity flow in the financial institutions through lowering the policy rates of repo and reverse repo. The RBI has also announced injection of more liquidity through Long Term‘Repo Operations (LTRO), a cut in cash reserve ratio (CRR) and an increase in marginal standing facility (MSF) to 3 percent of the Statutory Liquidity Ratio (SLR). In terms of quantitative easing, the RBI announced to purchase232 « CASES IN MANAGEMENT more bonds, commercial papers and convertible debentures even from NBFCs. Measures are also taken to promote credit flows among MSMEs and NBFCs through relaxation of regulations. Corporate loan resolution plans are deferred, and individual loan moratorium period has been extended to ease the life of both the corporates and the households. The scenario raises some pertinent questions: If the deflationary trend continues in the next five years, is it affordable to the central bank to keep carrying out quantitative easing? The question becomes obvious since the base interest rate is already near zero or negative many countries. Can the interest rate be lowered further? Is there a room for further quantitative ceasing? These issues need to be addressed based on the reflections from the monetary actions during the recent past economic crises. Reflections from the monetary techniques employed in the past crises Case-1: Sub-prime lending crisis of 2008 and Feds interventions in the US: The Federal Reserve in the United States reacted quickly to douse the 2008 financial crisis by formulating a three points strategic approach. Interest (fund) rate was cut substantially and brought down from 5.25% to near 0% by December 2008 to encourage borrowings and investments. The Fed also started buying mortgage backed securities in open market operations. By purchasing these instruments from the banks, the Fed facilitated the banks and financial institutions suffering with liquidity crisis to access more liquidity. An aggressive quantitative easing through large scale purchase of securities such as bonds and commercial papers eased out some liquidity stress of financial institutions as they injected more cash. In addition, the Obama government in October 2008 announced an equity injection of $700 billion into the banking system. Whether ‘the conventional monetary policy of USA was successful in tiding over the slowdown is the frequently raised question and there appears to be no unanimous answer. However, economists acknowledge that in a relative scale, the Fed's policy was more effective than any other central bank. Case-2: European Economic Crisis & ECB's Unusual Monetary Strategy: The 2008 financial crisis of the US quickly erupted the Euro Area as well and had severe economic repercussions on Europe. The recession disrupted the region and gave rise to sick units and their closers led to unprecedented rise in the unemployment. As the consumption and demand had large scale contractions, the European Central Bank (ECB), initially, reduced the interest rates on a regular basis along with large scale quantitative easing. Despite its low and zero interest rate policy, 1no appreciable recovery in the market was visible. In its desperate effort to stimulate the‘CASES IN MANAGEMENT - 233 economy, the ECB announced an unprecedented decision of bringing the interest rate below zero and keeping it negative at -0.1% in June 2014. Subsequently, it was further lowered to - 0.5% anticipating high credit growth rate. This directly aimed at facilitating more credit growth and accelerating investments. The success of negative interest rate in Euro Area is highly debated. An analysis of the macroeconomic data sheds light on the facts that the consumption continues to be low and the growth in demand is slow, unemployment rate has sustained at higher level and credit growth remains stagnant as the investors are not encouraged to borrow credit even at no cost. With six years of negative interest rates, still the inflation remains closer to zero and the GDP growth rate hovers between zero and half a percentage. This intensifies the debate on whether the negative interest rate policy was a failure in Euro Area, Case-3: Japan's Monetary Actions Against Stagflation: For very long, Japan was fighting against stagflation with a host of tra ional fiscal and monetary measures. Krugman (1998) suggested Japan to cut down the long-term interest rates and promote spending to bring the country out of stagflation. In line with the suggestions, Japan adopted quantitate easing, expanded money supply, and kept interest rate very low and brought down near zero, But such monetary techniques could not control deflation, Amidst recessionary economic crisis, in 2016 the Bank of Japan, after unsuccessful efforts with low interest rates and quantitative easing, as a last resort, made an historic announcement of moving the interest rates to less than zero or towards negative zone, When Japan walked in the footprints of by ECB, it had two objectives. Firstly, revival of borrowing, spending, and investment, and discourage savings. Secondly, the sovereign debt of Japan was more than 200% of GDP and was anticipating an affordable interest payment burden with the implementation of negative interest rate. Much alike Euro Area, Japan does not seem to stimulate the bull power in the economy through negative rates, Investment, credit growth, GOP growth, consumption spending growth, public debt among other macro indicators continued to be unsatisfactory despite negative rates and quantitative easing. It is evident from the above three cases that the conventional monetary approaches of quantitative easing and interest rate adjustments had very little success. Need for an alternative monetary approach for early revival of global economies from COVID 19 pandemic As discussed in the previous sections, countries are applying all feasible means of monetary and fiscal measures to prevent further downturn in the economies, and optimistically, create230 « CASES IN MANAGEMENT reflation. Similar to the experiences of the several crises’ cases of the past, the COVID-19 triggered economic crisis does not appear to relent to the fiscal and monetary stimulus measures, The European Central Bank and the central banks of Denmark, Japan, Sweden, and ‘Switzerland, already, have negative interest rates. Most of the other advanced economies including the USA have lowered interest to near zero. All emerging economies like India and China amongst others have brought down the base interest rates and follow low-bound interest rate policy. In addition, even, the quantitative easing measures have dried up. Now, for the central bank, what's up? When none of its monetary strategies are effective, can the central bank throw up the hand and leave to the economy to take its own course of action? Probably, Not. With the change in the time and change in the complexity of the crisis, the central bank is, expected to be innovative in dealing with the crisis. The think-tank, central bankers and ‘economists across the globe are debating whether ‘dropping money from the helicopter’ can be an effective alternative monetary action. Feasibility of ‘helicopter money’ as an alternative mechanism to deal with COVID-19 triggered economic downturn Prof. Milton Friedman, in 1969, proposed helicopter money as a hypothetical experimental model to deal with the serious economic downturn when the central banker exhausts with all monetary weapons. Helicopter money signifies, to quote Friedman, "unexpectedly dumping money onto a struggling economy with the intention to shock it out of a deep slump." In such mechanism, the central bank "directly increases the money supply and, via the government, distribute the new cash to the population with the aim of boosting demand and inflation. This requires the central bank to print new currencies and throw them out to the public. Friedman reminds us with the similar proposition made by Keyens (1936). Keynes advocated that to pull out from economic contraction, the central bank may print money and finance housing projects. This is the way to stimulate the ailing economy without burdening the government and without additional debt. This unconventional measure, theoretically, will jump start the economy when more cash is pumped directly into the hands of the people. This also means that it will add to the long term liquidity as there is no commitment of repayment. The theory of ‘helicopter money’ hit the headtines since 2002 when Ben Bernanke, then governor of the Federal Reserve in the USA, suggested to the USA administration that it might, consider to arrest deflation by resorting to helicopter money. His mechanism was to provide more fiscal space to the government by printing currencies that could be equivalent to tax cutsCASES IN MANAGEMENT - 235 and public spending of the government. This nick named Ben Bernanke with "helicopter Ben'! After Ben's advocacy, during the times of crisis, a few countries investigated the feasibility and viability of helicopter money. Venezuela, during the rule of Hugo Chavez and Nicolas Maduro in the last two decades, introduced several populist socialistic schemes such as increased minimum wages, social security measures, and subsidies. Since then fiscal deficit was on the rise and sovereign debt mounted sharply to unacceptable level. Unable to generate sufficient resources to meet rising fiscal deficit, the central bank enormously printed currencies. The printed currencies were circulated among people under various schemes, and in a way it was helicopter money. This has backfired Venezuela and it could only add further to the inflationary pressures generated by higher liquidity. The culmination is only the history and by 2018 the inflation peaked at an estimated rate of more than 1 million percentage. Apart from Venezuela, the central banks in countries such as Germany, Hungary and Zimbabwe also financed the government's deficit, by printing money. The story unfolded after the distribution of the printed money is not dissimilar to Venezuela. The increased money supply caused hyper-inflation in Germany, Hungary and Zimbabwe. Zimbabwe is the worst hit and it resulted in socio-political crisis as well. Unable to mitigate the inflation growth rate that was in thousands of percentage, in an ultimate attempt Zimbabwe demonetised domestic currency and proclaimed US dollar as legal tender currency in 2015, Hence, the countries that resorted to what could be termed as helicopter money have not only miserably failed in reviving the economies but also resulted in massive crisis. It was during 2008 financial crisis and afterword, the policy makers in many countries rushed to the board room to discuss the strategic perspectives of helicopter money and its implications. ‘The members in the Fed and many experts in the USA discussed at length whether the time was up for the US to drop money from the helicopter and whether the US should consider this, alternative framework with all seriousness. The expert views were divided and lacked unanimity. Even the ECB of EU probed the possible prospects of helicopter money as it exhausted with ali monetary weapons and the negative intrest rate policy falled miserably. Tire countries and the economists in the EU area coulc not reach to consensus on whether they should drop money from the helicopter. The Bank of Japan in 2016 also drew up its strategic option of helicopter money. But none among the central banks of the US, EU and Japan dropped money from the helicopter.236 » CASESIN MANAGEMENT The attention of the think-tanks across the world, once again, has moved towards helicopter ‘money in the pretext of unassuming and sudden global economic slump caused by the health emergency of COVID-19. The Governor of French Central Bank suggested helicopter money if the European economy takes longer route to recovery. He proposed a mechanism to pump the money whether in liquidity will be injected to corporates, rather than households. Eric Lonergan, a macro hedge-fund manager at M&G Investments in London, argued in favour of helicopter money and opined that the ECB should consider to jump start the Eurozone economy by crediting large money to the account of every citizen. Left with no choice, in February 2020, Hong Kong dropped money to its residents amounting to $1,200 but these cases are ‘partial’ helicopter money. The Europe is confronting with ‘QE for the lion, Some other countries like Macau and Singapore also injected cash to the system, People’ campaign for long and its proposal was included in the European Parliament as well, ‘The campaign intended to drop helicopter money to finance infrastructure projects in Pan- European region. The campaign gains popularity in the wake of the fresh round of economic crisis erupted due to COVID-19. Lowrey (2020) writes in The Atlantic that the GDP of the USA is predicted to contract at a 24 percent rate in the second quarter, and unemployment might swell as high as 41 percent, tossing money out of a helicopter does not seem like such a bad idea. Joseph Gagnon, in reply toa question if he thought the Fed would be doing tossing out money if it had the option, "Oh, there's no doubt." Diane Swonk, the Chief economist at Grant Thorton sounds similar. There are also voices being raised in India, like elsewhere, to drop money from the helicopter. It is also pertinent to note that there are equally dissent views on experimenting with Friedman's helicopter drop. Finally, what stays on with us is a dilemma- whether the central banks should now consider dropping money from the helicopter or not!