The correct option is
1 only
Explanation
The Reserve Bank of India (RBI) classifies money supply into four measures: M1, M2, M3, and M4, based on liquidity and scope. M4 represents the broadest measure of money supply among these aggregates.
Statement 1 is Correct:
The formula for M4 is defined as M4 = M3 + Total deposits with Post Office Savings Organisations. Therefore, M4 inherently includes M3 (which consists of M1 + Time Deposits with the banking system).
Statement 2 is Incorrect:
M4 does not exclude deposits with Post Office savings organizations. Instead, it specifically includes total deposits with Post Office Savings Organisations. This distinguishes it from M3, which only considers deposits within the commercial banking system.
Statement 3 is Incorrect:
While M4 includes total deposits with Post Office Savings Organisations, the definition explicitly excludes National Savings Certificates (NSC). NSCs are long-term savings instruments and are not counted as part of the liquid money supply in this aggregate.
Key Takeaway:
M4 = M3 + Total deposits with Post Office Savings Organisations (excluding National Savings Certificates). It is the least liquid measure of money supply.