ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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MONEY AND BANKING- Monetary Expansion Continues Apace

September 8, 1984 MONEY AND BANKING Monetary Expansion Continues Apace EXPANSION in money stock (M1) in June at Rs 694 crore or 2 per cent was substantially larger than in the same month a year ago (Rs 284 crore or 1 per cent). But it was smaller than the expansion of Rs 936 crore or 2.8 per cent registered in May 1984. Currency and deposit money shared in the rise in the proportion of 15:85. In 1983 currency had contracted by Rs 17 crore, while deposit money had expanded by Rs 301 crore. Time deposits grew by Rs 1,469 crore, sizeably more than last year's increase. This was reflected in a larger M3 expansion of Rs 2,163 crore than that of Rs 1,438 crore a year ago (Table I). The expansion in net bank credit to govern ment and to the commercial sector was higher than in June 1983, Government's borrowing from RBI rose appreciably by Rs 2,191 crore in June 1984. On the other hand banks dis- invested their holdings of government securities to the tune of Rs 735 crore. The commercial sector's borrowing from commercial and cooperative banks at Rs 1,026 crore in June 1984 was much higher than in June 1983 (Rs 648 crore). The contribution of net foreign exchange assets of the banking sector to money expansion in June 1984 amounted to as much as Rs 262 crore as against Rs 49 crore in June The rate of expansion in M1 in the first

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