India is close to achieving its goal to attain full capital account convertibility as suggested by the Tarapore Committee, according to Finance Minister P Chidambaram.

‘‘We are within striking distance of the idea floated by Tarapore Committee’’, Chidambaram said addressing the inaugural function of Synd Bank Services Ltd, a wholly-owned BPO of Syndicate Bank, on Friday.

However, the Finance Minister expressed his concerns over the opposition from the Reserve Bank of India (RBI) employees on the capital account convertibility issue. “Why should some RBI employees oppose the idea...I would suggest my RBI friends to embrace and examine capital account convertibility”, Chidambaram said. The FM further said that there is no pressure on the liquidity, hinting that the situation may ease in near term. ‘‘We had spoken to the banks yesterday on liquidity issue and it is not a concern now’’, he said. Liquidity in the Indian banking system has tightened in recent weeks leaving banks struggling to meet the credit demand.

The Finance Minster also ruled out any concern over the rising inflation level. Rise in fuel and manufactured product prices have pushed the wholesale price index for the week ended March 11 to 4.28% from 4.02% in the previous week, recent government data showed. As this was above the consensus estimate—3.9% to 3.94% range—the data dampened bond market on Friday. The RBI forecast inflation between 5 and 5.5% for the current fiscal year.

Chidambaram stressed that improve in technology by the banking sector has speeded up the foreign remittance flow in the country, which is now $30 billion a year, and form a permanent part of India’s capital flow. He said that the banks have been performing admirably over the past few years through nationalisation and liberalistation of the banking sector. “In the last two years public sector banks have grown admirably and banks have responded splendidly to government’s suggestions”.

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