Narrow Money

Narrow money represents the portion of money supply that can be used right away for spending. It includes cash held by the public as well as balances in current or checking accounts that can be accessed without delay. In monetary terms, this measure is generally labelled M1, whereas M0 mainly captures currency in circulation along with the reserves of banks. Economists track narrow money to understand the amount of immediately spendable funds in the system, which helps central banks assess liquidity conditions and inflationary pressures.

Example: If someone has ₹5,000 in hand and ₹25,000 in a current account, then ₹30,000 would be counted as narrow money because it is available for instant use.