Hectically Printing Money

Indian Central Govt has 'monetised' Rs. 66,946 crore this year due to
rising gap between revenue and expenditure. It can only get worse.

The Indian UPA government has completely messed up its finances. With
falling tax revenues and immense expenditure increases in an election
year, it is crazy to make ends meet. At last count, the govt had
already "monetised" -ie printed notes - worth Rs. 66,946 crore to
bridge the yawning gap between revenue and expenditure. As India near
elections, it it will print more in the hope that some of it will
translate into votes.

Whenever the govt wants to borrow more than what people are willing to
lend it, it simply p***es the hat around to the Reserve Bank. It is
technically called borrowing, but in reality it is tantamount to
printing money to pay for its expenditure.

With so much "monetised" money sloshing about in the economy, the net
result is often higher inflation - after a lag. So, if you are
celebrating the dramatic drop in inflation from nearly 13% in August
last year to just over 5% now, don't. The inflation dragon has only
one into hibernation. It will return.

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