Q. Who among the following is headed the committee on capital account convertibility?

[A] S. S. Tarapore

[B] Vijay Kelkar

[C] C Rangarajan

[D] Venkata chellaih

Answer: A

Explanation: The Committee on Capital Account Convertibility (CAC) or Tarapore Committee was constituted by the Reserve Bank of India for suggesting a roadmap on full convertibility of Rupee on Capital Account.

  • The committee submitted its report in May 1997. The committee observed that there is no clear definition of CAC.
  • The CAC as per the standards refers to the freedom to convert the local financial assets into foreign financial assets or vice versa at the market determined rates of exchange.
  • The Tarapore committee observed that the Capital controls can be useful in insulating the economy of the country from the volatile capital flows during the transitional periods and also in providing time to the authorities, so that they can pursue discretionary domestic policies to strengthen the initial conditions.

Source: TMH Ramesh Singh