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Which among the following was the committee constituted by RBI to "lay the road map" to capital account convertibility?
- a)Narasimhan Committee
- b)Rangarajan Committee
- c)Tendulkar Committee
- d)Tarapore Committee
Correct answer is option 'D'. Can you explain this answer?
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Which among the following was the committee constituted by RBI to &quo...
The Tarapore committee was set up by the Reserve Bank of India under the chairmanship of former RBI deputy governor S.S.Tarapore to "lay the road map" to capital account convertibility. The five-member committee recommended a three-year time frame for complete convertibility by 1999 - 2000.
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Which among the following was the committee constituted by RBI to &quo...
Introduction to Capital Account Convertibility
Capital Account Convertibility (CAC) refers to the freedom to convert local financial assets into foreign financial assets and vice versa at market-determined rates. This is crucial for enhancing international trade and investment.
RBI's Role in Capital Account Convertibility
The Reserve Bank of India (RBI) plays a pivotal role in managing the Indian economy, including the implementation of policies for capital account convertibility. To facilitate this process, the RBI established various committees to evaluate and recommend a roadmap.
Tarapore Committee Overview
- Formation: The Tarapore Committee was formed in 1997, officially known as the "Committee on Capital Account Convertibility."
- Objective: Its primary goal was to assess the feasibility of moving towards a fully convertible capital account.
- Recommendations: The committee suggested a phased approach to achieve capital account convertibility, emphasizing the need for robust financial infrastructure, regulatory frameworks, and macroeconomic stability.
Significance of Tarapore Committee's Recommendations
- Phased Implementation: The committee proposed a staged implementation plan, which would allow the Indian economy to gradually adapt to the changes associated with capital account convertibility.
- Focus on Stability: It underscored the importance of maintaining economic stability to prevent sudden capital outflows that could jeopardize the financial system.
- Impact on Policy: The recommendations provided a foundational basis for subsequent policy measures related to capital account convertibility in India.
Conclusion
In summary, the Tarapore Committee was crucial in laying down the roadmap for capital account convertibility in India. Its thoughtful recommendations aimed at ensuring a balanced and stable transition, making it the correct answer to the question posed.
Capital Account Convertibility (CAC) refers to the freedom to convert local financial assets into foreign financial assets and vice versa at market-determined rates. This is crucial for enhancing international trade and investment.
RBI's Role in Capital Account Convertibility
The Reserve Bank of India (RBI) plays a pivotal role in managing the Indian economy, including the implementation of policies for capital account convertibility. To facilitate this process, the RBI established various committees to evaluate and recommend a roadmap.
Tarapore Committee Overview
- Formation: The Tarapore Committee was formed in 1997, officially known as the "Committee on Capital Account Convertibility."
- Objective: Its primary goal was to assess the feasibility of moving towards a fully convertible capital account.
- Recommendations: The committee suggested a phased approach to achieve capital account convertibility, emphasizing the need for robust financial infrastructure, regulatory frameworks, and macroeconomic stability.
Significance of Tarapore Committee's Recommendations
- Phased Implementation: The committee proposed a staged implementation plan, which would allow the Indian economy to gradually adapt to the changes associated with capital account convertibility.
- Focus on Stability: It underscored the importance of maintaining economic stability to prevent sudden capital outflows that could jeopardize the financial system.
- Impact on Policy: The recommendations provided a foundational basis for subsequent policy measures related to capital account convertibility in India.
Conclusion
In summary, the Tarapore Committee was crucial in laying down the roadmap for capital account convertibility in India. Its thoughtful recommendations aimed at ensuring a balanced and stable transition, making it the correct answer to the question posed.
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Which among the following was the committee constituted by RBI to "lay the road map" to capital account convertibility?a)Narasimhan Committeeb)Rangarajan Committeec)Tendulkar Committeed)Tarapore CommitteeCorrect answer is option 'D'. Can you explain this answer?
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