India’s Per Capita Income

The following chart shows the Per Capita Income of India from 2000-01 to 2011-12. As per the Economic Survey 2011-12, India’s Per Capita Net National Income (factor cost at current prices) at Rs. 60972 for 2011-12. The per capita income in real terms (at 2004-05 prices) during 2011-12 is likely to attain a level of […]

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Multilateral Trading System

Commercial Policy Instruments (CPI) like levying import duty (tariff) as well as other tariffs and adapting other non-tariff barriers like quantitative restrictions enable a country such as India to safeguard its industries from these gigantic claws of the developed countries. If there are no commercial policy instruments, it would be very difficult to compete with […]

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Tarapore Committee on Capital Account Convertibility

Jumping into capital account convertibility game without considering the downside of the step can harm the economy. 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. […]

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Capital Account Convertibility

The term Capital Account Convertibility was coined by RBI and this term is almost synonymous with the RBI committee headed by SS Tarapore. Capital account convertibility (CAC) means the freedom to convert local financial assets into foreign financial assets and vice versa at market determined rates of exchange. This implies that Capital Account Convertibility allows anyone to freely move from […]

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Full convertibility of Rupee

The Government when introduced the Partial convertibility of Rupee in 1992, had announced its intention to introduce the full convertibility on the current account in 3-5 years. The full convertibility means unified market determined exchange rate regime. Encouraged with the success of the LERMS, the government introduced the full convertibility of Rupee in Trade account […]

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Partial Convertibility of Rupee

The above mentioned Liberalized Exchange Rate Management System (LERMS) introduced a dual exchange rate system. This is also called as partial convertibility of the Rupee. Meaning of Convertibility The convertibility of a currency has different meanings in different times. In existing standards, it means that the country’s currency becomes convertible in foreign exchange and vice […]

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BoP Crisis in India

From 1947 till 1956-57, the India had a current account surplus. By the end of the first plan, the Trade deficit was Rs. 542 Crore and Net Invisibles was Rs. 500 Crore, thus giving a BoP deficit in Current Account worth Rs. 42 Crore. From this time onwards, the trade deficit increased from 3.8% of […]

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India’s BoP at Capital Account

As we studied above, the BoP in India has been classified into BoP at current account BoP at Capital Account India’s BoP at Capital Account Under capital account, capital inflows can be classified by instrument (debt or equity) and maturity (short or long-term). The main components of capital account include foreign investment, loans and banking […]

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India’s BoP at Current Account

As we studied above, the BoP in India has been classified into BoP at current account BoP at Capital Account India’s BoP at Current Account This is calculated as follows: Exports – Imports = Trade Balance (1) Invisible Payments – Invisible Receipt = Net Invisibles (2) (1) + (2) = BoP on Current Account. This […]

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BoP Adjustment

How BoP is adjusted? There is not much bothering if there is a surplus in the balance of payments, however, every country strives to remove or at least reduce a balance of payments deficit. There are a number of adjustments, which are done to correct the balance of payments disequilibrium. Two of them are important, […]

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