{"id":24082,"date":"2024-06-08T11:35:04","date_gmt":"2024-06-08T06:05:04","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=24082"},"modified":"2025-09-30T12:10:14","modified_gmt":"2025-09-30T06:40:14","slug":"capital-account-convertibility","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/capital-account-convertibility\/","title":{"rendered":"Capital Account Convertibility"},"content":{"rendered":"<h2>About Capital Account Convertibility:<\/h2>\n<ul>\n<li><strong>Balance of Payments Account: <\/strong>It is a statement of all transactions between a country and the outside world. It consists of two accounts:\n<ul>\n<li><strong>Current Account: <\/strong>Deals with the import and export of goods and services.<\/li>\n<li><strong>Capital Account: <\/strong>Involves cross-border movement of capital via investments and loans.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Current Account Convertibility: <\/strong>Freedom to convert rupees to other currencies for payments without restrictions.<\/li>\n<li><strong>Capital Account Convertibility:<\/strong>\n<ul>\n<li>Freedom to conduct investment transactions without constraints.<\/li>\n<li>No limits on converting rupees to foreign currency for asset acquisition.<\/li>\n<li>No limits on NRIs bringing in foreign currency to acquire assets in India.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Why is it important?\u00a0<\/strong><\/li>\n<\/ul>\n<p>Caution in Developing Countries: Inflows and outflows of capital are volatile, can cause excessive currency appreciation\/depreciation, and impact monetary and financial stability.<\/p>\n<ul>\n<li><strong>India&#8217;s Progress<\/strong>:\n<ul>\n<li><strong>Partial capital account convertibility <\/strong>achieved.<\/li>\n<li>India&#8217;s cautious approach in opening its capital account was praised after the <strong>1997 East Asian currency crisis<\/strong> revealed issues with high current account imbalances and volatile short-term capital flows.<\/li>\n<li>The <strong>2006 SS Tarapore committee<\/strong> report highlighted that even countries with strong fiscal positions could face currency crises and rapid exchange rate deterioration.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1. What is rupee convertibility?<\/h3>\n<p>Rupee convertibility refers to the ability to freely exchange the Indian rupee for other foreign currencies or assets without significant restrictions or controls imposed by the <a href=\"https:\/\/vajiramandravi.com\/current-affairs\/reserve-bank-of-india\/\" target=\"_blank\">Reserve Bank of India (RBI)<\/a> or the government. It allows for the conversion of rupees into other currencies at market rates, enhancing international trade and investment.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/banking-and-finance\/rbis-agenda-capital-account-liberalisation-globalisation-of-rupee-and-digital-payment-system-9379011\/\" target=\"_blank\" rel=\"nofollow noopener\">RBI\u2019s agenda: capital account liberalisation, globalisation of the rupee and digital payment system<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Capital Account Convertibility allows FDI &#038; FPI, enabling foreign investment in India, a significant structural reform to boost the economy.<\/p>\n","protected":false},"author":5,"featured_media":24083,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-24082","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/24082","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=24082"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/24082\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/24083"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=24082"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=24082"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=24082"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}