The main source of money supply in India is in the form of bank deposits and cash. RBI monitors the money supply in the economy and has the power to print and issue currency. Base money is the money issued by the Central Bank. You can read about the Monetary Policy – Objectives, Role, Instruments in the given link.
Money supply of a country is increased by the process of money creation or money issuance. The amount of demand deposits and currency is dependent on banking development, trade practices, banking habits and degree of monetization.
- Monetary Policy Committee (MPC) – Structure, Objectives UPSC Notes
- Monetary System – Types of Monetary System