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Bank Deposits in the Indian Economy-A Comment

A Comment M Siddappa V G PENDHARKAR, in 'Bank Deposits in the Indian Economy: A Note on August 1967, pp 1567-72), has discussed deposit expansion in a situation where the increment in bank credit to Government repeats itself regularly a given number of times. Here, the first assumption is that, such expansion of bank credit to Government gives rise to an exactly equal increase in bank deposits. This can be achieved if Government makes all its payments by credit to the private sector's bank deposits and makes no payments in currency. The second assumption is that, on each occasion, the increment comes at the same time as the beginning of a new cycle of deposit-credit-deposits.
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