Minister of State for Finance Jayant Sinha has said India needs to move towards full capital account convertibility to become a leading global economy.
Sinha's comments came a day after the International Monetary Fund predicted Asia's third-largest economy would become the fastest growing major economy in the world, outpacing China.
Without specifying any time frame, Sinha said, "If we are going to be one of the top three or four economies in the world, we have to make it possible for our capital markets to be broader and deeper, and more liquid. And for that to happen, capital account convertibility also becomes important."
"Now, how that is going to happen, what are the specific steps that are going to be undertaken over the next ten years or so we have, in fact, done that in the past also, as we have moved towards more and more convertibility. So, we have to see how all of this evolves, definitely, we have to play our rightful responsible role in the global economy, we have to move in that direction," he added.
The rupee has been convertible on the current account since 1994, meaning it can be changed freely into foreign currency for purposes like trade-related expenses. But it cannot be converted freely for activities such as acquiring overseas assets.
Fuller convertibility is expected to facilitate rapid growth through higher investment and improve efficiency in the financial sector through greater competition.
Last week, Reserve Bank of India (RBI) chief Raghuram Rajan had expressed the hope that the rupee would become fully convertible in a 'short number of years'.
