Monetising part of fiscal deficit inevitable: ex-RBI governors and experts

Monetising deficit means that the RBI purchases govt bonds directly in the primary market and finances this debt by printing more currency

Former governors of the Reserve Bank of India and other experts believe that the central bank will have to partly monetise the government’s fiscal deficit, which is likely to balloon as it battles the impact of the coronavirus disease (Covid-19). They feel this wouldn’t have much of an inflationary impact in the current situation.
 

Monetising deficit refers to the exercise of RBI purchasing government bonds directly in the primary market and financing this debt by printing more money.
 

Former RBI governor C Rangarajan said with expenditures increasing and revenues falling, there was a need for greater borrowing by the government.