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 Opinion - Letters


Capital account convertibility

This is with reference to "Capital account convertibility - Carefully-calibrated approach needed" (Business Line, February 2). The article has rightly emphasised that the move towards capital account convertibility (CAC) should be calibrated and cautious. Though the bulging forex reserves give confidence to move towards CAC, it is essential to ensure fulfilment of certain other conditions recommended by the Tarapore Committee.

Important among them are:

  • Gross fiscal deficit to GDP ratio has to come down to 3.5 per cent.

  • Inflation rate should remain between an average 3-5 per cent for three years before adoption of CAC.

  • Gross non-performing assets of the public sector banking system needs to be brought down to 5 per cent.

    The Centre should, therefore, reschedule the Tarapore Committee "road map to CAC". It is also desirable that the primary deficits of the Centre as well as the States must move to zero before moving to CAC.

    C. Ramesh

    Keeramangalam (TN)

    Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

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