Economic reforms in India have accelerated growth,
enhanced stability and strengthened both external and financial sectors. Our
trade as well as financial sector is already considerably integrated with the
global economy. India's cautious approach towards opening of the capital account
and viewing capital account liberalisation as a process contingent upon certain
preconditions has stood India in good stead.
Given the changes that have taken place over
the last two decades, however, there is merit in moving towards fuller capital
account convertibility within a transparent framework. There is, thus, a need
to revisit the subject and come out with a roadmap towards fuller Capital Account
Convertibility based on current realities. In consultation with the Government
of India, the Reserve Bank of India has appointed a committee to set out the
framework for fuller Capital Account Convertibility.
The Committee consists of the following:
i. Shri S.S Tarapore Chairman
ii. Dr. Surjit S. Bhalla Member
iii. Shri M.G Bhide Member
iv. Dr. R.H. Patil Member
v. Shri A.V Rajwade Member
vi. Dr. Ajit Ranade Member
The terms of reference of the Committee will
be:
i. To review the experience of various measures
of capital account liberalisation in India,
ii. To examine implications of fuller capital
account convertibility on monetary and exchange rate management, financial
markets and financial system,
iii. To study the implications of dollarisation
in India of domestic assets and liabilities and internationalisation of the
Indian rupee,
iv. To provide a comprehensive medium-term
operational framework, with sequencing and timing, for fuller capital account
convertibility taking into account the above implications and progress in
revenue and fiscal deficit of both centre and states,
v. To survey regulatory framework in countries
which have advanced towards fuller capital account convertibility,
vi. To suggest appropriate policy measures
and prudential safe- guards to ensure monetary and financial stability, and
vii. To make such other recommendations as the Committee may
deem relevant to the subject.
Technical work is being initiated in the Reserve
Bank of India. The Committee will commence its work from May 1, 2006 and it
is expected to submit its report by July 31, 2006.
The Committee will adopt its own procedures
and meet as often as necessary. The Reserve Bank of India will provide Secretariat
to the Committee.
Alpana Killawala
Chief General Manager
Press Release: 2005-06/1192