Money Supply

India measures money supply in aggregates from M0, the monetary base, through M3, the broad measure that is the main reference. Money is created mostly by commercial bank lending rather than by the central bank printing it, which is why credit growth and money growth move together. The old proposition that money growth translates directly into inflation has proved unreliable, because the velocity of money is not stable — money can grow rapidly without inflation if it is not spent. Central banks now target inflation directly rather than money aggregates, which is why the series receives less attention than it once did.