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It is associated with changes of ownership in foreign/domestic financial assets and liabilities and embodies the creation and liquidation of claims on, or by, the rest of the world. CAC can be, and is, coexistent with restrictions other than on external payments. It also does not preclude the imposition of monetary/fiscal measures relating to foreign exchange transactions which are of a prudential nature”. So this means that CAC will result in free and unregulated inflow and outflow of Capital funds. India has since long adopted the Current Account Convertibility wherein the exporters and importers can have easy conversion to and forth in foreign currency where they trade...
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