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Responses to Sticklish Issues dated January 8

The issue of India going in for full convertibility is being debated in various forums. One view is that this move will improve India's attractiveness to foreign investors. Professor Joseph Stiglitz has advised us against it.

The economy is booming and needs to be properly managed. Or else, the economy runs the risk of getting overheated. However, many problems are yet to be overcome. For instance, the over dependence on fossil fuels. The service sector is driving the economy.

The Tarapore Committee has drawn up a five-year road map for convertibility.

Capital control, though acclaimed to be effective at the time of crisis, cannot be a perfect arrangement.

Gradual administration of small doses of capital account convertibility (CAC) in the economy may be practical.

T. S. Sundareswaran, New Delhi

Prof Stiglitz's caution against CAC should be taken seriously. While the East Asian crisis exposed the risks involved, the Chinese example has shown how FDI can be received without capital account convertibility.

The Tarapore Committee has also recommended three phases `towards' full convertibility. We should bring reform in the banking sector, in our systems and procedures and a change in attitude towards profit.

A. Jacob Sahayam, Thiruvananthapuram

CAC is a desirable step in the context of globalisation and the welcoming of FDI in various sectors.

However, the points raised by Prof Stiglitz deserve consideration.

A review of the matter would be welcome. Recommendations by earlier committees can be examined afresh in the context of various economic decisions taken lately and the present rate of growth of the economy.

T. R. Anandan, Coimbatore

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