Current account convertibility: UPSC Daily Important Topic | 1 February 2022

Current account convertibility

✓ Current Account Convertibility allows free inflows and outflows of foreign currency for all purpose including resident Indians buying foreign goods and services (imports), Indians selling foreign goods and services (exports), Indians receiving and sending remittances, accessing foreign currency for travel, study abroad, medical tourism purpose etc.

✓ Current Account Convertibility: Current account is today fully convertible (operationalized on August 19, 1994).

✓ It means that the full amount of the foreign exchange required by someone for current purposes will be made available to him at the official exchange rate and there could be an unprohibited outflow of foreign exchange (earlier it was partially convertible)..

✓ India was obliged to do so as per Article VIII of the IMF which prohibits any exchange restrictions on current international transactions.