Capital Account Convertibility in India

Abstract

Capital Account Convertibility (CAC) has been regarded by modern economists as one of the hallmarks of a developed country, the enduring endgame in globalization. One of the most persuasive arguments for capital account liberalization is that globalization has come to stay and those developing countries needs to be part of the global financial integration of countries. It is argued that the need for increasing financial integration of the developing countries with financial markets of the industrialized world is completed through CAC. India has vigilantly opened up its capital Account since the early 1990ís as policymakers realized that domestic savings and taxes are inadequate to cater country is huge investment needs. India has received foreign money in the form of FDI, ADRs, GDRs, ECB, Bonds, and FII etc. The set of laws related to various components of capital accounts have been revised from time to time based on the economic conditions, global events and needs of the nation.


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Categories: April 2014