Deficit financing, what are the various DF in India in 250 words for UPSC

Deficit Financing,  Various  deficit financing  in India Meaning : Deficit financing refers to the practice of covering the gap between a government’s expenditure and revenue by borrowing or creating new money (monetization). It is a tool used by governments to boost economic activity, especially during times of recession or economic stagnation. This method involves borrowing from internal or external sources or printing new currency through the central bank. While it stimulates demand and promotes development, excessive reliance on deficit financing can lead to inflation and fiscal instability. Types of Deficit Financing in India : Borrowing from the Public : The government issues bonds and securities to the public, financial institutions, and banks to raise funds for its expenditure. External Borrowing : Loans and grants from international institutions (e.g., World Bank, IMF) or foreign governments are used for developmental projects. Monetization of Debt : The Reserve Bank of India (RBI) directly f…