The Indian economy is passing through an unprecedented phase, and so is the fiscal health of the country. It is pretty clear that the government will not be able to achieve its FY21 fiscal deficit target of 3.5 per cent of GDP. The exchequer is facing a revenue crunch due to falling tax revenue, and difficulty in realising the disinvestment target in an uncertain market.
Adding to it, the RBI has projected a negative GDP growth rate for the Indian economy in FY21. The Government of Indi ..
The government stimulus package of Rs 20 lakh crore seems to be inadequate to revive the economy, as a large part of it accounts for liquidity-boosting measures by RBI. It is clear that the weak fiscal position forced the government to restrict the stimulus. It is in this scenario, that the need for monetisation of deficit has been widely debated.
In layman’s language, monetisation of deficit means printing more money. In other words, monetisation of deficit happens when RBI buys govern ..