Within days of the prime minister stating that the country should move towards capital account convertibility as the financial condition is far more comfortable than it was in the '90s, the Reserve Bank of India has appointed a committee to prepare a comprehensive framework for full convertibility.
The six-member committee would be headed by S S Tarapore, former deputy governor of RBI who had also headed the earlier committee on full convertibility. Other members of the committee are Surjit Bhalla, M G Bhide, A V Rajwade, Ajit Ranade and former NSE chief R H Patil.
The committee would examine implications of fuller capital account convertibility on monetary and exchange rate management, financial markets and financial systems. It would also study the implications of dollar-isation in India of domestic assets and liabilities and internationalisation of the Indian rupee.
After deliberations, the committee would suggest 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.
The committee would also suggest appropriate policy measures and prudential safe-guards to ensure monetary and financial stability.
The committee would start work by 01 May and submit the report by 31 July 2006.