ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Towards Monetary Chaos

Towards Monetary Chaos THE Reserve Bank's credit policy for the second half of 1993-94, announced this week, is geared almost entirely to the medium- term policy framework of structural adjustment and ignores the serious distortions in the movement of monetary variables. There can be no quarrel over the 7.7 per cent growth in broad money (M3) in the first half of 1993-94 or the 14 per cent growth now anticipated in the full fiscal year; in fact, it was the RBl's earlier projection of 12 per cent M3 growth in 1993-94 that had been unrealistic. But what about the rise of no less than Rs 22,755 crone in net bank credit to government in the first half of the financial year, which is more than twice the expansion in the comparable period of last year and about Rs 5,000 crore more than the increase in the whole of 1992-93? Bank credit to the commercial sector, on the other hand, has gone up by only Rs 1,928 crore in the first half of 1993-94, compared to f\ye times that increase (Rs 10,830 crore) last year.

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