Three years could be a long time.

"The Reserve Bank of India (RBI) plans to buy back government securities of Rs 300 billion on 3 September, with all securities listed in the auction maturing in FY27. The aim of the buyback is likely to reduce the redemption burden on the government in the next fiscal year. Securities worth Rs 6 trillion are scheduled to mature." ET. The government sells bonds to fund its fiscal deficit, which is "the difference between what a government spends and what it collects in revenue, often leading to borrowing to cover the shortfall if spending is greater." (Investopedia). As on 28 February 2026 the RBI held Rs 21.34 trillion of government paper (including treasury bills), an increase of Rs 5.76 trillion over Rs 15.58 trillion in March 2015. "An increase of this scale has never been witnessed." "RBI's holdings of government paper have increased: this is tantamount to deficit monetization. But income on securities adds to its surplus, which is transferred to the government," wrote Madan Sabnavis. Deficit monetization is when a central bank creates new money to finance government spending instead of by selling bonds to private investors or raising taxes. "It is prohibited in many countries, because it is considered dangerous due to the risk of creating runaway inflation." wikipedia. In May, the RBI "transferred a record Rs 2.87 trillion ($30.1 billion) as dividend to the government, compared with last year's Rs 2.69 trillion." "The annual report showed interest income rose 11.81% to Rs 2.36 trillion in the financial year ended March. Interest earned on rupee bonds climbed 37.66% to Rs 1.18 trillion." The RBI also gains from selling dollars at a rate higher than the buying rate and transfers those gains to the government. The Print. "India's central bank sold about $7 billion to defend the rupee last Friday (28 August), in what was one of its largest direct interventions in months, according to people familiar with the matter," ET. So, the RBI prints money to buy government bonds, which is like transferring sacks-full of new notes to the government, and then transfers the interest from those bonds to the government as well. This increase in liquidity results in a drop in the value of the rupee, so the RBI sells dollars to support the rupee, and transfers apparent gains from the difference in sale/purchase values to the government. For us ordinary citizens, not as brilliant as RBI officials, this seems like magic. There is only a teeny weeny problem: the RBI can print rupee notes but not dollars. "India's foreign exchange reserves climbed to a record high of $729.33 billion in the week to 21 August." "In June, India unveiled a raft of measures to boost dollar inflows, including discounted hedging facilities for overseas borrowings by state-run firms and banks, and a free-of-cost hedging facility for banks to raise overseas Fx deposits." Reuters. Banks are paying much higher rates of interest on Foreign Currency Non-Resident Bank (FCNR B) deposits from expatriate Indians, with HDFC Bank paying 6.25% on 5 year USD deposits, while IDFC First Bank is offering 6.75% for 5 years. The RBI is buying these dollars from banks and will repay them at the same exchange rate at the end of 5 years, thus absorbing the full cost of rupee depreciation. Would it mean more printing of rupee notes? "In the early 1950s, the government started issuing Treasury bills to the central bank for funds to bridge its deficit." This continued for four decades until, "As a part of the 1991 reforms, the government and RBI decided to stop this financing arrangements." "In 1997, the government and RBI signed an agreement that stopped this practice of deficit financing." The India Forum. Borrowing from the IMF would have been cheaper but electoral suicide. So they are borrowing at huge costs because five years will take repayment to beyond the next general election due in April 2029 (wikipedia). Till then we are back to the 1950s. There are still three years to 2029. They think they are being clever. Perhaps, too clever.