Although the government has begun to prepare the roadmap of full capital account convertibility of the rupee, economists feel that India is not yet game for it.
Economics professor at the Indian Statistical Institute Abhirup Sarkar told PTI that CAC at this stage was 'unnecessary and unwarranted'.
He said since India was still a developing nation, foreign investors had little faith in the Indian economy.
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Sarkar said in case of a panic, foreigners would start converting rupee into dollars in the domestic market, which would lead to a fall in the value of the local currency.
In another scenario, any expectations of probable depreciation of the rupee would also lead to conversion into greenback by foreigners.
"In that case, it will be difficult to maintain the value of the rupee," Sarkar said.
Agreeing with Sarkar, Anindya Sen, economics professor at the Indian Institute of Management, Calcutta said India was able to remain insulated from the East Asian crisis, as the rupee was not convertible in the capital account.
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