1.5. Money Supply in India

Money supply refers to total supply of money in active circulation in a given country's economy at a given time. It refers to the money held by ‘public’ which includes all economic units (private individuals, business firms and institutions). It does not include the producers of money (RBI, government, commercial banks) to avoid double counting.

Money supply is considered an important instrument for controlling inflation by some of the economists. Economists analyze the money supply and develop policies revolving around it through controlling interest rates and increasing or decreasing the amount of money flowing in the economy. Money supply data is collected, recorded and published periodically by the RBI.