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Public finance term: ‘‘Deficit financing’’ in India generally means borrowing from whom? Identify the monetized source that increases base money. Choose the correct option.

Q: Public finance term: ‘‘Deficit financing’’ in India generally means borrowing from whom? Identify the monetized source that increases base money. Choose the correct option.

Concept In India’s budget context, deficit financing classically refers to borrowing from the RBI, i.e., money creation to fund the gap. Final Answer The Reserve Bank of India (monetization)

Difficulty: Easy

The Reserve Bank of India (monetization)
Commercial banks only
Foreign governments
Public via small savings

Correct Answer: The Reserve Bank of India (monetization)

Explanation:

Concept

In India’s budget context, deficit financing classically refers to borrowing from the RBI, i.e., money creation to fund the gap.

Final Answer
The Reserve Bank of India (monetization)

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