UPSC Prelims PYQ 1998: Capital Account Convertibility of the Indian Rupee implies?

Capital Account Convertibility of the Indian Rupee implies

1. that the Indian Rupee can be exchanged by the authorised dealers for travel
2. that the Indian Rupee can be exchanged for any major currency for the purpose of trade in goods and services
3. that the Indian Rupee can be exchanged for any major currency for the purpose of trading financial assets
4. None of the above

Explanation

Option (c) is correct

• Capital account convertibility (CAC) is the flexibility to translate local financial assets into foreign financial assets and vice versa without limitations

Answer: (c) that the Indian Rupee can be exchanged for any major currency for the purpose of trading financial assets