General Knowledge - Indian Economy - Discussion

The financing when there is Shortfall in revenue.

What is exact Deficit financing?

Definition of deficit finance:

When the budget deficit is financed by borrowing from the public and banks, it is called deficit financing. Deficit financing refers to the borrowing undertaken by the government to make up for the revenue shortfall.

IMF: International Monetary Fund.

What is the full form of IMF?

If the usual sources of finance are inadequate for meeting public expenditure, a government may take resort to deficit financing, particularly in India. A budgetary deficit to an excess of total budgetary expenditure over total budgetary receipts. The deficit may be met by raising the rates of taxation or by charging higher prices for goods and services supplied by the Government The deficit may also be met from the accumulated cash balances of the Govt. , or by borrowing from the banking system. If the last two methods are followed, there is said to be deficit financing.

The Cycle is that in case of Deficit Financing, the govt asks money to the RBI(which is a central bank) and the central bank then asks money from the International Monetory Fund( through the Special Drawing Rights-which is held only by the RBI in INDIA).
(Please do correct me if I am wrong)

In the event of financial deficit govt ask aid fronm the rbi first, even if not sufficiant, rbi is supposed to ask money from imf but govt can't ask the money directly to imf.

But RBI is the central bank for the country which provides money to the government if the is running in deficit it borrows money from IMF please explain the difference.

How is it possible RBI is also part of central govt?