Question

7. What did Tarapore Committee mantion about Gold in economics?

Answer 1

The Tarapore Committee was formed to review the various measures of capital account liberalisation of India and to examine the implication of capital account convertibility on financial markets and monetary and exchange rate management. In short, it wanted to provide monetary and financial stability to the country.  So, they made various recommendations to achieve their objective among which gold import was one of them

One of their objective was that they wanted to have a full convertibility of the Indian Currency, rupee on Capital Account. This is because, they saw that the if they control the capital account, it can be useful in protecting the Indian economy from the volatile capital flows during the transitional periods of economy which was divided into first phase (2006-2007), second phase (2007-2009) and third phase (2009-2011). It would also provide time to the authorities to pursue discretionary domestic policies to strengthen the conditions of the Indian economy.

Regarding gold, they said that unlimited amount of gold being imported would allow this full convertibility in capital account through the current account.