Gradual steps towards rupee convertibility: Pranab Mukherjee

Finance minister Pranab Mukherjee said the government will take steps to make the rupee fully convertible in a calibrated manner so that mechanisms can be in place for tackling any adverse impact.

“Full convertibility of rupee is our destination. We are taking gradual steps towards this. But it is felt that it is not time to jump to that destination at one go. There is need for calibrated approach, ” he told the Rajya Sabha in reply to a query.

The full convertibility of the Indian currency means that the rupee would be made freely exchangeable into other currencies and vice versa. The rupee was made partially convertible in 1994. Currently, it can be changed freely into foreign currency for business and trade expenses but not freely for activities like acquiring overseas assets.

Full convertibility of the rupee was one of the bottlenecks telecom firm Bharti Airtel faced in its bid to acquire South African firm MTN.

Mukherjee said the government was adopting a cautious approach, taking into consideration all aspects and the risks involved in opening up the economy by allowing convertibility of the currency.

Experts feel full convertibility of rupee would facilitate further growth and higher investments.