Capital Account Convertibility: Issues and implications

Dr. Ravindra Tripathi; Dr. Manoj Kumar

Dr. Ravindra Tripathi Senior Lecturer, Department of Business Studies, United Institute of Management, Naini, Allahabad
Dr. Manoj Kumar Senior Lecturer, Department of Business Studies, United Institute of Management, Naini, Allahabad

Keywords: Capital Account Convertibility, Currency, Financial assets

Abstract

Hon’ble Prime Minister Manmohan Singh, a great economist, when called for a renowned push towards making the rupee convertible on capital account, there were wide spread protests. Capital Account Convertibility (CAC) has not been on the political agenda since 1997, when a committee headed by former Deputy Governor S.S. Tarapore set out a road map towards full CAC by 2000. The East Asian crisis intervened, and the plan was shelved for the time being. Tarapore heads a new committee to look into another CAC roadmap in the month of March of this year. The committee report was made public by the Reserve Bank of India on September 1, 2006. However, since the last one, India has opened up its capital substantially. Through this research paper, we are trying to analyse the various issues towards CAC and its effect in the Indian economy with fair suggestions.