ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Tamil Nadu- Clumsy Ploy

ply as that by the Reserve Bank, Operationally, too, for a government operating on a deficit budget, the inflationary impact of credit taken from the banks and that taken from the central bank is almost the same, especially if one considers the present situation of idle funds with the banks. Of course, it could be argued that in the absence of additional borrowing from the banks, the government would have borrowed from the Reserve Bank. This is in a sense to make a virtue of necessity, since banks are in possession of idle funds today mainly because they have failed to deploy their funds for productive activities in areas other than organised industry and trade

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