In 2024-25, narrow money M1 in India was Rs 65,84,081 crore and broad money M3 was Rs 2,72,86,589 crore. The difference between these two values is attributable to:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → time deposits held by commercial banks
M1 = currency with the public + demand deposits. M3 = M1 + net time deposits of commercial banks. So the gap between M3 and M1 is the time deposits held by banks.
Note: Small print counts. The line written just below a table in the chapter can carry a whole question, so read it with the table.
NCERT (2026-27): “Legal Definitions: Narrow and Broad Money … RBI publishes figures for four alternative measures of money supply, viz. M1, M2, M3 and M4. They are defined as follows “Table 3.4: Changes in M1 and M3 Over Time (in crore) (2023-24) … 2024-25 6584081 27286589 Source: Handbook of Statistics on Indian Economy, Reserve Bank of India, 2024-25 The difference in values between the two columns is attributable to the time deposits held by commercial banks.” |