Opinion - Letters to the Editor   

Rupee convertibility

The editorial "Revisiting capital account convertibility" (March 22) is apt and eminently foreboding. As the Indonesian experience of 1997-98 shows, if the situation were to sour in a free-for-all convertibility regime, the greater threat would be of local or home-grown depositors withdrawing dollars than of foreign institutional investors transferring their assets abroad.

Devraj Sambasivan,
Alappuzha, Kerala

The Manmohan Singh Government apparently feels the present spurt in economic growth is because of its economic reforms, and therefore wants more reforms to generate faster growth. The move towards capital account convertibility seems to be a response in this genre. If the world economy slows down due to an energy crisis and consequently the IT boom subsides, and inflation rears its head in India due to rising oil prices and the easy availability of credit to consumers at low interest rates, such a move may lead to a catastrophe.

K. Vijayakumar,
Bangalore

Full convertibility is a double-edged weapon. It can destroy our economy as it did South East Asian economies in the 1990s. Or it can become a boon to our surging economy with very high levels of foreign exchange reserves and low rate of inflation. If the Government decides to go for full convertibility, it should put enough regulatory and safeguard measures in place such as giving powers to the RBI to intervene in case of a crisis.

R. Murugesan,
Vellore, T.N.

The combination of capital convertibility and a corrupt executive is the perfect recipe for economic suicide. That is what made many African countries bankrupt.

S.S. Kaimal,
Thiruvananthapuram

Our economy is steady with limited convertibility and the stock market also looks buoyant. Complete convertibility has not been very encouraging with a big list of countries going bankrupt. When the going is smooth, do we need to take the risk?

B.R. Haran,
Chennai

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