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The Tara pore Committee recommended that before capital account was made convertible the rate of inflation should be brought down for three years to within :
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- 3.5%
- 0.3%
- 4.6%
- 5.7%
- 3.5%
Correct Option: A
The Tara pore Committee on capital account convertibility had laid down a three year, three phase schedule for allowing convertibility. It laid down three pre-conditions: (a) fiscal consolidation implying that the centre’s fiscal deficit should come down to 3.5 per cent of GDP; (b) a mandated inflation target; and (c) strengthening of the financial system to (i) involve a near complete clampdown on activities of weak banks, (ii) major cut in the CRR, and (iii) complete deregulation of interest rates.
