The Indian rupee is fully convertible on the current account, but only partially convertible on the capital account. Subbarao's comments were in line with those of other Indian policymakers who have repeatedly said the capital account must be opened up only gradually.
"We believe we must move towards capital account convertibility, along a road map -- the road map itself being recalibrated on a dynamic basis depending on both global and domestic developments," RBI Governor Duvvuri Subbarao told a meeting of central bankers and economists in Argentina.
He said capital flows must always be managed and that India would have a widening current account deficit as its economy grows more quickly than others in the world. "Managing capital flows you never get capital flows of exactly the kind you want and exactly the quantity you want," he said.
"This year, 2010/11, is quite important. We think current account deficit will widen because India is growing faster that the world which means our imports will grow faster than our exports," he added.