Deficit financing refers to the practice of funding government expenditure through borrowing or printing new currency notes when the revenue generated is insufficient to cover the expenses. In the context of India, the mechanisms of deficit financing include borrowing from the Reserve Bank of India (RBI) and issuing fresh currency notes. Let's discuss each mechanism in detail:

1. Borrowing from RBI:
- The RBI acts as the central bank of India and is responsible for managing the country's monetary policy. It maintains the cash reserves of commercial banks and lends money to them.
- When the government needs funds to finance its expenditure, it can borrow from the RBI by issuing government securities (bonds or treasury bills). These securities act as instruments of borrowing.
- The RBI creates money by purchasing these government securities. This increases the money supply in the economy and helps the government meet its expenditure requirements.
- However, this mechanism has its limitations as excessive borrowing from the RBI can lead to inflation, erosion of the value of currency, and an increase in the fiscal deficit.

2. Issuing fresh currency notes:
- Another mechanism of deficit financing is the direct issuance of fresh currency notes by the government.
- The government can print new currency notes to finance its expenditure. However, this should be done cautiously to avoid inflationary pressures.
- Printing new currency notes increases the money supply in the economy, which can lead to an increase in demand and prices. Therefore, this mechanism needs to be carefully managed to maintain price stability.

3. Borrowing from commercial banks:
- While the question does not specifically mention borrowing from commercial banks as a mechanism of deficit financing in India, it is worth discussing this option as well.
- The government can borrow funds from commercial banks by issuing government bonds or borrowing through various market instruments.
- Commercial banks have a significant role in the financial system and can provide funds to the government to bridge the fiscal gap.
- However, borrowing from commercial banks can also have limitations, such as crowding out private investment and increasing the cost of borrowing for other borrowers.

In summary, the mechanisms of deficit financing in India include borrowing from the RBI and issuing fresh currency notes. While borrowing from commercial banks is not explicitly mentioned in the given options, it can also be considered as a mechanism of deficit financing. Therefore, the correct answer is option 'B' (1 and 3 only).

Bcause the commercial banks also gets money from RBI, which is also responsible executing the new currency notes. Hence, b is the correct answer.