gs1medium
Convertibility of rupee implies:
- A.being able to convert rupee notes into gold
- B.allowing the value of rupee to be fixed by market forces
- C.freely permitting the conversion of rupee to other currencies and vice versa
- D.developing an international market for currencies in India
▶ Answer & Explanation
Correct answer: C. freely permitting the conversion of rupee to other currencies and vice versa
Full convertibility of the rupee on the capital account means that residents and non-residents are free to convert domestic currency into foreign currency and vice versa, without restrictions, for all permitted transactions. This facilitates international trade and investment by allowing smooth exchange of currencies at market-determined rates.
Source: UPSC gs1 2015