Financial Daily from THE HINDU group of publications
Thursday, Mar 23, 2006
Financial Daily from THE HINDU group of publications Thursday, Mar 23, 2006 |
|
|
|
|
|
|
|
Opinion
-
Letters Full convertibility
The Prime Minister has revived the debate on full capital account convertibility. No doubt, India today has foreign exchange reserves exceeding over $140 billion. But is this enough case for full capital account convertibility? In India most curbs on the rightful use of foreign exchange have already been removed. Importers are not subject to any restriction on trade related payments for imports; it easy to send and receive money aboard for purposes of education, medical expenses, travel, for investments, etc. Any Indian wishing to use foreign exchange reserves for any rightful purpose is not being denied permission. However, bringing in capital account convertibility will only encourage misuse of the reserves since more black money can get converted to foreign currency and hoarders of black money will be tempted to transfer wealth abroad in foreign currency assets. It can also lead to sudden inflow and outflow of foreign capital. Today, India has a stable government with a clear economic policy but that may not always be the case. The Prime Minister has hinted that capital account convertibility will strengthen the confidence of foreign investors. But no foreign investor today has capital currency convertibility on his mind when investing India. Rather, he is asking the Government to ease bureaucratic restrictions, simplify tax and company laws, speed up the legal process faster, and develop better infrastructure. In this background full capital account convertibility can wait because both local and foreign investors are asking for other reforms. Sushil Mehra Bangalore
Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in
More Stories on : Letters | Forex
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2006, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|