Indian Fiscal Budget 1997-98: Full Text

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Capital Account Convertibility

  1. A little while ago I made a reference to capital account convertibility. We are proud of our foreign exchange earners. They have been given the facility of the Export Earners Foreign Currency (EEFC) Account. At present, the total amount in these accounts is a modest Rs.2000 crore. I propose to expand the scope of the account by allowing the following facilities:

    • To open offices abroad and to meet the expenses thereof; and
    • To make investments from the balance in the account in overseas joint ventures upto the limit of US$ 15 million, without reference to the RBI.

  2. I also believe that the time has come for preparatory work towards capital account convertibility. This is a cherished goal. It is also a matter of great sensitivity. Hence, I shall not make any commitment. For the present, I am asking RBI to appoint a group of experts to lay out the road map towards capital account convertibility, prescribe the economic parameters which have to be achieved at each milestone and work out a detailed time table for achieving the goal. I believe the appointment of such a group will send a powerful signal to the world about our determination to join the ranks of front-line nations.

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