(a) Define capital account convertibility. Examine Tarapore Committee (I and II) recommendations on capital account…

(a) Capital account convertibility and the Tarapore Committees. Capital account convertibility (CAC) is the freedom to convert domestic financial assets into foreign financial assets and the reverse, at market exchange rates, for cross-border borrowing, lending, portfolio and direct investment. India has had current account convertibility since 1994 and only partial capital account convertibility: FDI, portfolio inflows and external borrowing are regulated, and residents' outflows are capped (the Liberalised Remittance Scheme allows $250,000 a person a year). The first Tarapore Committee (1997) proposed full CAC in three years, by 1999–2000, but tied it to signposts: gross fiscal deficit of the Centre down from 4.5 to 3.5 per cent of GDP; inflation averaging 3 to 5 per cent; gross NPAs of banks cut from 13.7 to 5 per cent; the CRR cut from 9.3 to 3 per cent; a monitoring exchange-rate band of plus or minus 5 per cent around a neutral real effective rate; and a lower debt-service ratio. The Asian crisis of 1997 shelved the roadmap. The second Committee, on Fuller Capital Account Convertibility (2006), set a five-year, phased roadmap, dropped rigid deadlines and numerical targets, kept fiscal consolidation, low inflation and banking soundness as conditions, and recommended raising limits on FDI, portfolio and external borrowing, easing outflows and deepening forex and derivative markets, while keeping controls reversible. Assessment: CAC can lower the cost of capital and widen investment, but it brings volatile flows, exchange-rate swings and loss of monetary autonomy (the impossible trinity), which the 2008 crisis and the 2013 taper tantrum showed. India has therefore moved gradually, with partial CAC as a lasting position.

(b) TRIPS and Indian agriculture. TRIPS Article 27.3(b) lets members exclude plants and animals from patents but requires protection of plant varieties by patents, an effective sui generis system, or a combination. India chose a sui generis law, the Protection of Plant Varieties and Farmers' Rights Act, 2001, while the Patents Act excludes plants, animals and essentially biological processes. The Act protects breeders but lets farmers save, use, exchange and sell farm-saved seed, except in branded form, and provides benefit-sharing. The effects: private seed research and hybrid seed use grew, as with Bt cotton, but patented traits and royalties raised seed costs for small farmers. Biopiracy claims, such as the patents granted on turmeric, neem and basmati, had to be fought through costly challenges, and the Geographical Indications Act (1999) now protects products such as Darjeeling tea and basmati. Product patents for agrochemicals (since 2005) raised pesticide prices. The tension between breeders' and farmers' rights, and the unresolved review of Article 27.3(b), leave small farmers exposed, so safeguards for farmers' rights and public-sector research are needed.

(c) New Economic Policy and the structure of employment. After 1991, growth shifted from state-led, organised manufacturing towards services and informal activity. The share of agriculture in employment fell from about 64 per cent in 1993–94 to about 45 per cent in recent surveys, but manufacturing's share rose little, and construction and services absorbed the labour. Growth was often described as jobless: the employment elasticity of GDP fell below about 0.2 in the 2000s, and employment growth slowed sharply between 2004–05 and 2011–12, while female participation fell. Organised-sector employment stayed small, about a tenth of the workforce, and the public sector's share fell; informal workers are around 90 per cent of the workforce, and even organised firms use contract labour, so employment became more flexible and less secure, with a rising share of casual workers and the self-employed. IT and business services created skilled jobs but at limited scale. The evaluation is mixed: the policies raised growth and incomes and helped shift labour out of agriculture, but they did not generate enough formal, productive jobs, which is why labour-intensive manufacturing, skills and social protection are emphasised.