Jute- Grasping at Straws

November 25, 1972 works out to Rs 766 crores so far this year, or Rs 130 crores more than in the comparable period last year.
The justification for using the first, most restricted, concept of 'deficit financing' is that the deficit is what is financed by 'temporary, short-term ways and means' sources. Long-term - borrowings of the government are subscribed to by the 'public' out of the savings of the community. If the Reserve Bank later takes up these securities it is to finance the credit needs of the original buyers and not those of the government. By contrast, all short-term borrowings come directly out of created money. Further, as mentioned above, not all of the securities acquired by the Reserve Bank are floated in the year in which they are acquired. There is a constant flow of securities and cash between the Reserve Bank and the 'public'.