Making the Elephant Dance Through Capital Account Convertibility

Capital Account Convertibility is one of the ways to integrate a nation's economy with the global economy, to deepen and integrate financial markets, to increase access to global savings, to discipline domestic policy makers and to allow greater freedom to individual decision-making and proliferation of Information Technology. India must meet these pre-conditions before implementing full convertibility of rupee on Capital Account. The inevitable globalization process has set in motion a mega change, which has motivated …

…free currency policy is just one of them. Therefore, India can go ahead with full CAC very cautiously. We should treat liberalization of capital account as a process and not as a single event and it has to be embarked upon cautiously as part of overall economic reforms in our country as well as our assessment of emerging scenario elsewhere. Unless pre-conditions are met, the full CAC cannot make the elephant dance. Reference: ICFAI Press