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Currently, a lot of individuals and workers from different sectors and industries remain at home without...

Currently, a lot of individuals and workers from different sectors and industries remain at home without options of Work-From-Home scheme, due to the ECQ/GCQ caused by the COVID-19 pandemic. Why can’t the government just print, by a large number, its currencies (paper money) and have it distributed to those who need it?

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Answer #1

It is not possible for the government to print and distribute currency like that. There are some restrictions on it.RBI was granted its role in currency management on the basis of the Reserve Bank of India Act, 1934., especially section 22 of the Act.

The printing of the currency is based on the Minimum Reserve System. Under this system, RBI bas to keep a minimum reserve of Rs200 core comprising of gold coins and gold bullion and foreign currencies . Out of the total rupees 200 crore , 115 crore are in the form of gold coins and gold bullion and rest in the form of foreign currencies. RBi has the monopoly of issuing currency notes of all domination except 1 rupee notes . One rupee notes are issued by the Ministry of finance but distributed byRBi through commercial banks.

After maintaining the Reserve,the RBI can print any number of currency notes as per the requirement of the economy. Although RBI has to take prior permission from the government.

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