RBI acts coy of Tarapore report

To place CAC report in public domain in due course.

The second S S Tarapore committee on fuller capital account convertibility today submitted its report to the Reserve Bank of India (RBI), but the central bank said it would "place the report in the public domain in due course."

The rupee is fully convertible on the current account but not on the capital account for buying assets overseas.

The committee was appointed in March 2006 after Prime Minister Manmohan Singh said a roadmap to greater convertibility was needed as economic conditions had become far more comfortable in the last few years.

The other members of the committee were R H Patil, A V Rajawade, Ajit Ranade, M G Bhide and Surjit Bhalla. Tarapore, former RBI deputy governor, also headed the previous rupee convertibility committee in the 1990s.

Analysts said a move towards greater convertibility on the capital account would be a boon for aspiring companies to make leveraged acquisitions overseas.

They felt the committee would have dealt with the issues such as lowering of fiscal deficit and impact of sudden capital outflows.

They said the committee is unlikely to have made any dramatic recommendations and more expected to suggest a gradual move towards fuller convertibility, not full convertibility.

The Fiscal Responsibility and Budget Management Act has set a target of lowering fiscal deficit to 3 per cent of GDP by 2008-09.

RBI said India's cautious approach towards opening of the capital account and viewing capital account liberalisation as a process contingent upon certain preconditions has served India well.

The committee was appointed to revisit the subject and suggest a roadmap towards convertibility based on current realities.