|Convertibility of Rupee Cycle|
Convertibility of rupees is known as freedom of exchange of rupee with other all international currency. It means that rupee can covert in USA dollars more easily and USA dollars can convert in Indian currency for buying and selling of goods and services. after study everything, I am writing, "it is conspiracy to lower the value of Indian currency that in real sense. In 1996, there were just Rs. 38 for every one dollar but after liberalized convertibility of rupee, one dollar exchange rate has reached up to Rs. 45 in 17th Jan. 2011. When convertibility of Rupee was started, it was claimed that our export will increase because our Indian companies will easy to trade in foreign country due to easy exchange without any govt. restriction. But, it opens doors for importing useless things and moreover it is very sad for India that gold is not make as standard exchange currency. China is smart than India, under his new foreign exchange policy, convert all his foreign exchange in gold. Now, his Chinese yuan is equal to Indian Rs. 6.89.
* Meaning of Partial Convertibility of Rupee
Partial convertibility of Rupee was started in 1992 for current account. In simple word, there is no control of Indian currency official. Any foreign company can do business and can go to his country with this profit after exchanging all Indian currency in their foreign currency. For example, According to its Directors’ Report, a public document filed with India’s Registrar of Companies, “Google India Private Ltd” reported revenues of Rs. 779.34 crore (around $172.03 million at current rates), over the 15 month period from Jan 2009 to March 2010. For the same period, it reported a profit after tax of 97.96 crore ($21.62 million), and received foreign exchange of Rs. 666.25 crore, with a foreign exchange out go of Rs. 304.24 crore. In this, example, we see that there is no our control our one foreign currency. From economic point of view, if any country has largest amount of other countries currency, that country will become economically sound. Suppose, if India has not USA dollars for exchanging Rs. 304.24 crore to Google India Pvt. Ltd, at that time, India has to take loan of same USA Dollars from USA and will pay interest on it. So, it will increase adverse balance of payment.
It is true, with partial convertibility of Rupees, investment in foreign country has become easy but it is also harmful for India, because same investment should be in India instead any other country. All companies think the benefit of their residential country from where they are operating their business. So, for India's interest, we have to make some strict rules for stopping outflow of fund on the the name of convertibility of rupee or liberalisation.
* Meaning of Full Convertibility of Rupee of Capital Account
Suppose, Mr. ABC is company of USA, it can buy any property in India by full conversion his currency in Indian currency.