New Delhi, Mar 30 (UNI) Bolstered by the Reserve Bank of India (RBI)'s reported dissenting note on Foreign Institutional Investors inflows, the Left parties today demanded that the UPA government dissolve the S S Tarapore Committee to suggest a roadmap on full convertibility.
The Committee, constituted by the RBI to prepare a roadmap for the government's move for full convertibility of the rupee, is to submit its report in July.
They claimed that their stand on the issue stood vindicated and cautioned the UPA government against overriding the central banks's opposition and that all those working for new economic liberalism should be shown the door in all government bodies.
Talking to UNI, the leaders of the CPI, CPI(M), RSP and Forward Bloc said any "unilateral" move would put Indian economy to great risk and that the government must keep in mind the world wide experience about how countries like Russia, Mexico and Argentina were competely devastated after they depended on the speculative economy.
The RBI's dissenting note assumes special significance in the light of Prime Minister Manmohan Singh's support to Finance Minister P Chidambaram's advocacy for full convertibility of the rupee on the grounds that it was time to "revisit" the subject of full capital account convertibility.
Mr P Chidambaram had also stressed that the opposition to the idea in some quarters was due to the fact that they were not'' familiar with the idea'', while the government, having contained, fiscal and revenue deficits, was within "striking distance" of achieving the goals set by the Tarapore Committee.
CPI General Secretary A B Bardhan said the RBI has also realised the negative consequences of capital account convertibility.
''Actually the National Common Minimum Programme has apprehended any such move while pointing out to the vulnerability of the financial system to the flow of speculative capital.'' ''The experience of successive financial crises like Mexico, Russia, Brazil, Turkey, Argentina and the South-East Asian countries over the past decade must not be lost sight of,'' Mr Bardhan warned.
''Not only that the Tarapore Committee needs to be wound up, all those working in government bodies for carrying forward the so- called economic reforms, which have simply led to jobless growth and social unrest and economic divide should be shown the door,'' the CPI veteran said.
CPI(M) senior leader and Polit Bureau member M K Pandhe, stating that the party alongwith other Left parties had also raised the issue in Parliament, held that full float of the rupee would further encourage speculative inflows and ruthless commercial borrowings in the backdrop of the stock and real estate upward swing, currency appreciation and widening current account deficit in the country.
''Similar conditions existed in the Asian Tigers preceding the crisis in 1997-98,'' Mr Pandhe said.
CPI national Secretary Shamim Faizi said it was now widely held within the policy making circles across the developing nations that full capital account convertibility, which allowed any entity to transfer their funds at will in and out the country, caused more harm than good.
''India's economy can not be put to such risk,'' Mr Faizi said adding that the opposition to the idea by over 100 top economists including G Chandrasekhar should also be taken note of.
RSP leader and MP Manoj Bhattacharya said the Left was opposed to the idea as it would further lead to volatility in the market.
''Of course this will lead to complete buoyancy of the MNCs. It will also lead to the erosion of our huge foreign reserves.'' He pleaded that the government would have to be very careful and cautious. The government should not rush for it and keep in mind the set back the Asian Tigers suffered.
Forward Bloc General Secretary and MP Debvrat Biswas said, ''the RBI's dissenting note has simply vindicated our position, and now the government must rectify its approach.'' UNI KSA RP BD1545