Move towards full Re convertibility: PM

Favouring a move towards fuller capital account convertibility in the context of changes in the last two decades, Prime Minister Manmohan Singh today asked the finance ministry and the Reserve Bank of India (RBI) to work out a roadmap to attract greater foreign investment.

"Our position, internally and externally, has become far more comfortable. I will request the finance minister and the Reserve Bank to revisit the subject (of capital account convertibility) and come out with a roadmap based on current realities," Singh said while releasing the third volume of the history of RBI today.

Elaborating on the need to move towards capital account convertibility within a transparent framework, Singh said progress in this regard would facilitate the transformation of Mumbai into not only a regional but a global financial centre.

He said there were multiple options possible for such a centre, including a special economic zone, and added: "I am confident that we can make steady but firm progress in that direction." He also wanted the state government to provide an enabling environment, particularly adequate infrastructure.

After the liberalisation process started in 1991, the rupee has become fully convertible on the current account, mainly for trade purposes. The movement on convertibility of rupee for capital purpose has been slow as the RBI adopted a cautious approach, especially after the 1997 East Asian currency crisis that led to flight of capital in those countries.