MONEY AND BANKING- Currency-Led Monetary Expansion

January 26, 1985 MONEY AND BANKING Currency-Led Monetary Expansion (By a Special Correspondent) DURING the calendar year 1984, just ended, there was a huge expansion of Rs 5,023 crore in money stock M1 In 1983 and 1982 the expansion was much lower at Rs 3,523 crore and Rs 3,866 crore, respectively. Component-wise, both currency and deposit money contributed to the growth, but the share of currency in the expansion at 75 per cent was the largest ever in the past decade. This can be attributed to the better performance on the export front and the ensuing increase in foreign remittances together with increases in priority sector lending and food procurement credit in absolute terms. Time deposits rose by 15.1 per cent (Rs 7,947 crore) in 1984, less than the rise of 19.6 per cent (Rs 8,653 crore) in 1983. This brought down the rate of expansion in M3 to 15.3 per cent (Table 1).