Save jobs or protect savers? A new monetary policy dilemma amid Covid-19

The extraordinary accommodative stance of the Reserve Bank of India (RBI), which the monetary policy committee (MPC) members say should continue for as long as necessary to nurse back durable growth, is also bringing new monetary theories into the equation. 

While the world is still debating whether modern monetary theory (MMT), which encourages governments to spend without having any meaningful fiscal constraints, should be the norm, RBI’s Executive Director Mridul Saggar proposed something new for India — Heterogenous Agents New Keynesian (HANK) model. 

In simple terms, the model suggests that interest rates can be kept low for the greater good. While a