labels: economy - general
Left Parties oppose free float of the rupeenews
04 September 2006

Left parties will oppose any plans to make the rupee freely tradable against other currencies. Making the rujpee freely convertible would increase capital flows out of India, encourage reckless borrowing by companies and create a currency crisis, they argue.

On Friday, the Reserve Bank of India had released a road map to greater capital account convertibility drawn up by an expert panel, which outlines a three-phase plan extending to 2010-11 to allow greater movement of capital in and out of the local currency.

The panel was formed after prime minister Manmohan Singh in March mooted the idea to give greater freedom to individuals and companies to borrow overseas and acquire foreign assets to spur economic growth.

It is argued that if the Indian economy is to clock 10 per cent-plus growth, it needs greater inflows of foreign direct investment and easing restrictions on capital flows would go a long way in boosting investor confidence and bring in capital on the scale needed to build India's infrastructure to global scale.

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Left Parties oppose free float of the rupee