Explanation:

Statement 1: When we print currency, we inject additional demand in the economic system, and this increased demand need not be accompanied by increased supply of goods. This may be inflationary in most cases. It brings in regular pressure and obligation on the government for upward revision in wages and salaries of government employees— ultimately increasing the government expenditures necessitating further printing of currency and further inflation—a vicious cycle into which economies entangle themselves. Hence, printing currency is the last resort for the government in managing its deficit.

Statement 2: The system of gold backing has been repealed, and the RBI manages printing of currency. This is because the additional currency is a liability on RBI and it must ensure that it has sufficient reserves to clear this liability.