Govt move on capital a/c convertibility 'adventurist': CPM

New Delhi, Nov 3 (UNI) Charging the Manmohan Singh government with charting a ''risky'' and ''adventurist'' course toward fuller capital account convertibility, the CPI (M) today said the Tarapore Committee recommendations should be debated in Parliament before they are implemented.

The objection by the party's polit bureau came in the wake of the announcement of the Reserve Bank of India (RBI) that it was implementing some recommendations of the Tarapore Committee on Fuller Capital Account Convertibility.

''It is a matter of serious concern that the RBI has initiated the implementation of the recommendations of the Tarapore Committee despite strong reservations expressed from several quarters,'' a statement from the CPI (M) polit bureau said.

RBI announcement was for raising the remittance limit for resident Indians from 25,000 dollars to 50,000 dollars per financial year, easing of norms for external commercial borrowings by banks, raising the limit on foreign institutional investor investments in government securities from two billion dollars by March 2007 and enhancing ceiling of overseas investment by mutual funds from two billion dollars to three billion dollars.

CPI (M) said there was a strong apprehension that further liberalisation of capital account would increase volatility in the domestic financial system and make it vulnerable to capital flight and currency meltdown.

These were the exact experiences of the South East Asian countries not too long ago, the polit bureau said.

Spiralling inflation and other adverse consequences would affect the whole population in such a scenario, the party warned.

''It is difficult to understand the keenness of the government in moving along this risky and adventurist course when the benefits of it, if any, would be restricted to a handful of corporates, banks and high networth individuals,'' the polit bureau said.

Moving toward fuller capital account convertibility does not feature in the National Common Minimum Programme, which sets the policy priorities of the UPA government, it added.

''The people of the country need to know about the risks involved in such a move,'' the party said while demanding a debate in Parliament on the Tarapore Committee recommendations before they are considered for implementation.

The recommendations should also be put under ''rigorous scrutiny'' by the Parliamentary Standing Committee on Finance and until such time the scrutiny and the debate were over, the RBI should not be allowed to go ahead with their implementation, the party said.

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