The Tarapore Committee (1997) defines CAC as “the freedom to convert local financial assets into foreign financial assets and vice-versa at market-determined rates of exchange”. This basically implies complete mobility of capital across countries. Says CII director of financial services G Srivastava: “We have to address the larger macroeconomic question of whether our economy is ready for full CAC. Conditions like fiscal discipline, controlled inflation and sustainable growth must be fulfilled. India is certainly not ready to introduce full CAC.”

Opines FICCI economic advisor Anjan Roy: “We are expecting $30 billion worth of FDI this year. Even if there is a slight slowdown in the growth rate of capital flows, it will not harm the economy. High capital inflows are anyway exerting upward pressure on the exchange rate.”