The automatic monetisation of budget deficits of Central Government by the Reserve Bank was discontinued since 1997-98, and currently, the Reserve bank does not participate in the primary issuance of the government paper. It is true that the aggregate stock of public debt of the Centre and States as a percentage of GDP is high, currently at around seventy five per cent.
It is also useful to note that there are several unique features of management of public debt in India, which imparts overall stability to macro-economy. First, States have no direct exposure to external debt. Second, almost the whole of public debt is local currency denominated and held almost wholly by residents.