CPI(M) opposes full capital account convertibility

New Delhi, Mar 22 (UNI) The Communist Party of India (Marxist) today vehemently opposed the Centre's move to introduce full capital account convertibility, saying that ''it is a significant departure from the Common Minimum Programme,'' which forms the basis of governance by the UPA dispensation.

In a statement, the Polit Bureau of the CPI(M), which met here yesterday, said the CMP was committed to reducing the vulnerability of the financial system to the flow of speculative capital.

''The party does not agree with the view that the comfortable position of the Indian economy, both internally and externally, warrants a revisiting of capital account convertibility, which was shelved after the contagion of severe currency crises hit the South East Asian countries in 1997-98, from which India could insulate itself only because of the extant capital controls,'' it said.

The statement pointed out that following the experience of successive financial crises in countries like Mexico, Russia, Brazil, Turkey and Argentina, besides the South East Asian countries, over the past decade it is now widely held within policy circles across the developing countries that full capital account convertibility, which allows any entry to transfer their funds at will in and out of a country, causes more harm than good.

The Polit Bureau took serious exception to Prime Minister Manmohan Singh having made the announcement on full capital account convertibility at the Asian Corporate Conference in Mumbai when the Parliament was in session and the Finance Bill being debated.

It said the Reserve Bank of India had already announced the formation of a committee headed by S S Tarapore to chalk out a roadmap for full capital account convertibility.

In this context, the CPI(M) demanded that the decision to form the committee be rescinded.

UNI SH SC BD1924