Monetized deficit refers to the part of deficit financing that is financed through borrowings from the Reserve Bank of India (RBI). Let's understand this concept in detail.

Deficit financing:
Deficit financing refers to the practice of financing government expenditures through borrowing or printing money when the revenue falls short of the expenditure. It is used by governments to bridge the gap between their income and expenditure.

Monetized deficit:
Monetized deficit specifically refers to the portion of deficit financing that is financed by the RBI. In this case, the government borrows money directly from the central bank to meet its expenditure needs.

Explanation:
- Borrowings from public sector scheduled commercial banks: This option is incorrect as it refers to borrowing from public sector banks. While the government can borrow from banks, it is not considered monetized deficit as it involves borrowing from entities other than the RBI.

- External commercial borrowings: This option is also incorrect as it refers to borrowing from external sources such as foreign banks, governments, or international financial institutions. Monetized deficit specifically refers to borrowing from the RBI, which is an internal source.

- Borrowings from RBI: This option is the correct answer. Monetized deficit involves the government borrowing funds directly from the RBI. The RBI creates new money to lend to the government, which increases the money supply in the economy. This borrowing is usually done by the government by selling government securities (bonds) to the RBI. The RBI pays for these securities by creating new money, which is then used by the government for its expenditure.

Monetized deficit has its implications:
- Inflationary pressures: Monetized deficit increases the money supply in the economy, which can lead to inflationary pressures if not managed properly. The increased money supply can lead to excess demand, causing prices to rise.

- Crowding out private investment: Monetized deficit can also crowd out private investment as it leads to increased borrowing by the government, which can increase interest rates and reduce the availability of funds for private sector borrowing.

- Fiscal discipline: Reliance on monetized deficit can indicate a lack of fiscal discipline as it allows the government to finance its expenditure without addressing the underlying issues causing the deficit.

In conclusion, monetized deficit refers to the portion of deficit financing that is financed through borrowings from the RBI. It involves the government borrowing funds directly from the central bank, which increases the money supply in the economy. Monetized deficit has implications such as inflationary pressures and crowding out private investment.