Money supply growth slows down
January 31, 2009 by admin
| Owing to subdued credit off take and resources used to bolster up government securities, the money supply, popularly known as M3, in circulation has taken a dip of 18.7% on a year-on-year basis in the fortnight ended January 16, 2009 from 19.6% for the 14 days period ended January 2, 2009, blow RBI’s revised estimate of 19% for 2008-09.
Earlier, RBI had raised the M3 estimate from 17% to 19% in the recent third-quarter review of the monetary policy. The reason behind the drop in M3 is the corporate sector which has gone slow on its capital expenditure plans, leading to a shrink in bank credit to the commercial sector and also the banking sector have diverted a larger chunk of their assets for additional government bonds. |
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