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Full rupee conversion unlikely soon: Official

FM said he does expect full convertibility before 2008-09, a deadline by which the Govt aims to wipe out its revenue deficit.

india Updated: May 04, 2006 15:41 IST

The government is unlikely to make the rupee fully convertible soon and will take adequate safeguards before the reform, a senior finance ministry official said on Thursday.

A six-member central bank committee has begun looking into the proposal, made by Prime Minister Manmohan Singh in March, and will produce a road map by July 31 this year.

The rupee is only partially convertible and India has in the past set out benchmarks for full capital account convertibility, including levels of foreign exchange reserves, the fiscal deficit, inflation and non-performing assets of banks.

"We have set up a committee and we are awaiting its report. There is no hurry now," said Ashok Chawla, additional economic affairs secretary in the finance ministry.

"The parameters need to be firmly under control, including the budget deficit, for a sustained period of time."

Finance Minister Palaniappan Chidambaram has said he does expect full convertibility before 2008/09, a deadline by which the government aims to wipe out its revenue deficit and slash the federal fiscal deficit to 3 per cent of gross domestic product.

The government is bound by a fiscal law to achieve the targets and has been trying to shore up revenues while keeping a tight leash on expenditure.

It aims to cut its fiscal deficit to 3.8 per cent of GDP in the fiscal year ending March 2007 from 4.1 per cent last year.

First Published: May 04, 2006 15:41 IST