India needs to move towards full capital account convertibility and deepen its capital market to become a leading global economy, Minister of State for Finance Jayant Sinha said today.
"There are many policy measures and many things that we have to do over a period of time, if indeed India has to become a leading global economy... We have to make it possible for our capital markets to be broader, deeper and for that to happen, capital account convertibility also becomes important," Sinha told reporters at an event here.
Incidentally, International Monetary Fund (IMF) said yesterday that India will overtake China as the fastest growing emerging economy in 2015-16 by clocking a growth rate of 7.5 per cent, helped by its recent policy initiatives, pick-up in investments and lower oil prices.
World Bank too has similar GDP growth forecast for India for the current fiscal.
Sinha's comments follows RBI governor Raghuram Rajan's statement last week that the central bank is looking at allowing full capital account convertibility in a few years.
Full capital convertibility means a foreign investor can repatriate his money into his own local currency at will, which is not allowed in the country as of now.
Sinha said that India has became more and more open in the last few years.
"Definitely, we have to play our rightful, responsible role in the global economy, we have to move in that direction (capital account convertibility)," he said.
According to analysts, full rupee convertibility can help in a big way in developing global financial services hubs in India, one of which was launched by Finance Minister Arun Jaitley recently in Gujarat.
At the same time, some experts opine that RBI's policy of partial capital control has actually helped India tackle global headwinds, including during the currency meltdown in many South Asian economies, which had full capital convertibility in 1997-98.
