Page 499 - ES 2020-21_Volume-1-2 [28-01-21]

126 Economic Survey 2020-21 Volume 1

Figure 2: Broad money growth (YoY)

Source: RBI

4.7 From the component side, aggregate deposits which is the largest component has contributed
most in the expansion of M3 during the year so far (Figure 3). Amongst sources, bank credit
to the government was a major contributor to the increase in M3. Banks’ higher investments in
liquid and risk-free assets such as SLR securities and G-secs, resulted in higher net bank credit
to the government. Bank credit to the commercial sector also supplemented M3 expansion from
the sources side. The credit growth of SCBs (YoY) was 6.7 per cent as on January 1, 2021 as
compared to 7.5 per cent at the corresponding time a year ago.

Figure 3: Deposits growth (YoY)

Source: RBI
4.8 Money multiplier, measured as a ratio of M3/M0 which was mostly increasing from 1980s
onwards up to 2016-17, has however been declining since then. As on March 31, 2020, the