This document discusses the four measures of money supply in India: M1, M2, M3, and M4. M1 is the narrowest measure including currency and demand deposits. M2 adds savings deposits and time deposits to M1. M3 is the broadest measure including items in M2 plus time deposits and institutional money market funds. M4 additionally includes savings with post offices. Recent data shows M1, M2, and M3 have all reached record highs in India, with M3 reaching over 145 trillion Indian rupees in November 2018.

1. Measurement of money supply in
India
Tanya
Date: 30-11-18Economics

2. 4 measures of money supply:
1. M1 (Narrow measure)
2. M2 (Intermediate measure)
3. M3 (Broad measure)
4. M4
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3. M1:
• M1 includes all currency (i.e. cash) in circulation, traveler’s checks, demand deposits at
commercial banks (or other depository insititutions) held by the public, and other checkable
deposits
• It is often referred to as the narrowest measure of money supply or narrow money
• M1= currency with the public+ deposit money of the public (Demand deposits with the banking
system+ other deposits with the RBI)
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4. M2:
• M2 includes everything in M1 as well as savings deposits, time deposits and balances in retail
money market funds
• It is often referred to as an intermediate measure because it is broader than M1 but not quite as
broad as M3
• M2= M1+ saving deposits with post office savings banks
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5. M3:
• M3 includes everything in M2 as well as time deposits, balances in institutional money market
funds, and term repurchase agreements.
• It is considered the broadest measure of money supply.
• M3= M1+ time deposits with the banking system= Net bank credit to the government+ bank
credit to the commercial sector+ net foreign exchange assets of the banking sector+
government’s currency liability to the public+ net non monetary liabilities of the banking sector
(other than money deposits)
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6. M4:
• It is the most broader concept than any other aspect, it is low in liquidity.
It includes
• M4 = M3+Savings with post offices (other than national saving certificates)
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7. Related data:
• Money Supply M1 in India increased to
32917.10 INR Billion in September from
32135.50 INR Billion in August of 2018.
• Money Supply M1 in India averaged 6057.10
INR Billion from 1972 until 2018, reaching an
all time high of 32917.10 INR Billion in
September of 2018 and a record low of 80.15
INR Billion in January of 1972.
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8. • Money Supply M2 in India increased to
33429.66 INR Billion in October from
33059.67 INR Billion in September of 2018.
• Money Supply M2 in India averaged 10478.01
INR Billion from 1991 until 2018, reaching an
all time high of 33429.66 INR Billion in
October of 2018 and a record low of 1127.49
INR Billion in November of 1991.
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9. • Money Supply M3 in India increased to
145447.49 INR Billion in November from
144412.92 INR Billion in October of 2018.
• Money Supply M3 in India averaged 25500.58
INR Billion from 1972 until 2018, reaching an
all time high of 145447.49 INR Billion in
November of 2018 and a record low of 123.52
INR Billion in January of 1972.
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11. Comparison of US and India’s money supply:
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12. Thank you 
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