Insensitive Monetary Management

Insensitive Monetary Management BANKING and monetary developments in recent weeks have reflected the morbid state of the real economy, The conventional way of looking at financial year variations does not fully bring out the exceptional sluggishness of monetary and banking trends. The broad money measure (M3) has expanded by Rs 21,553 crore (or 5.9 per cent) between March 31 and July 23, which is somewhat lower than that during the corresponding period of the previous year (Rs 22,882 crore or 7.2 per cent). But what is significant is that the bulk of the increase this year took place in April. About 70 per cent of the increase in M3 took place before the end of April and the increase in the next three months between April 30 and July 23 has been only Rs 6,457 crore (or 1.7 per cent). All monetary and banking variables have been in a depressed state since April.