Full Convertibility, opines Meghnad Desai
Full Convertibility, opines Meghnad Desai Lord Meghnad Desai, member of House of Lords says that India should go for full convertibility of Rupee, reports Economic Times. It is learnt that delaying full capital account convertibility cost the small and medium enterprises and retail depositors since they cannot access better opportunities availed by large corporates. The apex bank has postponed this decision on the wake of Asian crisis. But it has the capability to handle this situation. Although adoption of full convertibility carries risk in the financial markets, but the crux of the situation is how to handle risk.
Lord Desai said he was very impressed by the manner in which the RBI handled the upward pressure on the Rupee, and the mature way in which Indian businesses have taken the stronger Rupee in its stride rather than rush to Delhi to have the policy reversed.
He also referred to large forex reserves saying there is now a cushion against sudden withdrawal of funds.
“Perhaps, if it was explained to the Left parties that large sums of money were shoring up US Treasury bills, it may vote for full convertibility as an anti-imperialist gesture,“ he said.
