At a broad conceptual level, and in my view in practice as well, this conclusion is clearly mistaken. Indeed, under a fiat (that is, paper) money system, a government (in practice, the central bank in cooperation with other agencies) should always be able to generate increased nominal spending and inflation, even when the short-term nominal interest rate is at zero.
We, at the RBI, have been actively studying these developments and readying ourselves to provide for a technology framework and operating environment, conducive to the banks. Let me share with you some of the initiatives that we have undertaken.