Why RBI can not print money all the time & distribute to poor?

Here is a good example.

Let’s assume a country called RICE-LAND where everybody eats rice.

Cost of rice is Rs1/kg.

RICE-LAND produces 100 kg rice each year. Cost of production is Rs.100

What if the government decides to print money &  give its money to poor to eradicate poverty?

Because people get money, they will go and buy rice in the market.

So demand of rice will increase.

So the people who earn money by hard work won’t have enough rice to eat and price of rice will increase.

This explains how printing money will give rise to inflation.

Now what should the government do in this case?

Government in this case will actually give subsidy to farmers. Let us assume subsidy of Rs.10 to buy tractor.

Due to farm mechanization farmer will be able to produce extra 10 kg rice or more than that.

Now cost of production of rice is Rs.110 and crop produced is 110 Kg.

So still you got cost of per kg rice Rs. 1/Kg.

And economic activity in the country increased which we call as GDP.

This gives a pretty good example how subsidies increase the GDP of country and why RBI cant print huge amount of money and distribute.