The column Open up the capital account by Ila Patnaik (FE, March 15) stressed upon the need for the unnecessary control on capital movements so that India could be made an international financial centre. Of course, currently, India has no full capital account convertibility. But globalisation of financial structure is essential for India. At the same time, we must analyse whether the sign posts for achieving full capital account convertibility are positive. Low NPAs and inflation rate, fiscal consolidation and strong financial system are the sign posts for full convertibility. But even a single sign post is not conducive in India. Fiscal disorder, the problem of CAD, growing NPAs and little scope for innovative financial instruments are the barriers for capital account convertibility. So, the North Block mandarins poured cool water on the road map to convertibility. In total, at the current financial backdrop, capital account convertibility cant be brought but steps need to be taken to improve investments, reduce fiscal disorder and bring CAD under absolute control.
NR Nagarajan, Sivakasi