Committee on Fuller Capital Account Convertibility

Committee on Fuller Capital Account Convertibility, commonly known as the Second Tarapore Committee, was a Reserve Bank of India committee formed to study the status of capital account convertibility in India and recommendations for future changes. It was formed on 20 March 2006. The report was submitted on 31 July 2006.[1][2]

Members

The members of the committee were:[1]

  1. S. S. Tarapore, Chairman
  2. Surjit S. Bhalla
  3. M. G. Bhide
  4. R. H. Patil
  5. A. V. Rajwade
  6. Ajit Ranade

The objective of the committee was to study the implementation of capital account convertibility in India so far and identify the effect fuller implementation would have on the financial system and monetary policy. The committee was asked to submit its report by 31 July 2006.[1]

Report

The report was released to public in September 2006. The report recommended that future implementation of capital account convertibility be done in three phases spread over five years. The report sought a ban on participatory notes as a mode of investment in Indian equities and easing the direct investment routes for foreigners. It suggested that foreign individuals investors should be brought at par with non-resident Indian investors. The committee recommended the restrictions on overseas borrowings by Indian firms and banks be eased. It said that the limit on remittances by individuals should be increased. It also recommended that the fiscal deficit be brought under control otherwise a large deficit will make India's economy vulnerable to shocks.[3] It proposed the formation of a monetary policy committee.[4]

See also

References

  1. 1 2 3 "Committee to set out Roadmap towards Fuller Capital Account Convertibility". Reserve Bank of India. 20 March 2006. Retrieved 15 May 2015.
  2. ↑ "Report of the Committee on Fuller Capital Account Convertibility" (PDF). Reserve Bank of India. 31 July 2006. Archived from the original (PDF) on 5 February 2009. Retrieved 15 May 2015.
  3. ↑ "Five-year roadmap for fuller float". Business Standard. 2 September 2015. Retrieved 16 May 2015.
  4. ↑ "Pact to tame price devil - Defined target set for inflation". The Telegraph (India). 3 March 2015. Retrieved 17 May 2015.

Further reading

  • "Report of the Committee on Fuller Capital Account Convertibility" (PDF). Reserve Bank of India. 31 July 2006. Archived from the original (PDF) on 5 February 2009.
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