Deficit financing means that the government borrows money from the A. RBI B. local bodies C. big businessmen D. IMF

The correct answer is: A. RBI

Deficit financing is a government’s practice of spending more money than it takes in through taxes and other revenue. The government borrows money to cover the difference, which is called a budget deficit. The RBI is the central bank of India, and it is the only institution that is authorized to print money. The government borrows money from the RBI by issuing treasury bills and bonds.

The other options are incorrect because:

• Local bodies are not authorized to print money.
• Big businessmen are not authorized to print money.
• The IMF is an international organization that provides loans to countries in financial difficulty. The Indian government has never borrowed money from the IMF.

Deficit financing can be a useful tool for governments to stimulate the economy during a recession. However, it can also lead to inflation if the government borrows too much money.