Monetisation of Deficit

● What does it mean?

» It means government of India will issue bonds to RBI and RBI will print extra cash and give it to government. 

»In RBI's balance sheet, the Govt. bonds will look as Assets and the printed currency notes will become Liability for RBI. 

●What will be its impact?

»This extra cash when govt. spends will go into the economy and may lead to inflation which may lead to depreciation of currency