Have you ever thought about reducing poverty in India? Then why does the government not quickly print currency notes and circulate them among people ?
The Reserve Bank of India is a regulatory body which deals with Indian banking and currency systems, from monetary to the economy. It is one of the largest and most trusted central banks of the government of India. RBI plays a significant role in framing strict rules and regulations on banking, currency, foreign reserves and economic stability.
The government keenly looks into currency making structures and announces the minimum amount of currency to be printed based on the requirements of demand and supply. Printing more currency will reduce the reputation of country and currency value. It might improve the purchasing power of the goods, but what about the supply of goods based on purchasing power?
Every year before the budget session, the finance ministry and RBI audit the currency usage in terms of public utility, need, wastage or torn notes. After deep analyzing, they print notes as per requirements. Limited or excessive currency notes can have a severe impact on inflation and on the Indian Economy.
Currency notes have a certain amount of frequency which is necessary to create a stable economic system. The government does statistical analysis before taking any actions on currencies. Demand and supply of goods require equal balance. For example, in Venezuela, they printed notes in huge numbers and supplied them to the citizens. Within a few days, the purchasing power had increased to 10 times higher than before and the supply of goods was reduced. The entire nation got into an economic crisis, which led to massive disturbances across the country. To buy a piece of bread requires a huge amount of currency notes. The value of currency declined for goods which were cheap before and after inflation, it needs more currency for fewer goods. Poverty reduction needs proper planning and economic enhancement through providing job opportunities and development of resources. Printing notes would in fact worsen the situation 100 times more than you think.
