1) INTRODUCTION
India’s development strategy was based on protection, self-reliance & import substitution before the liberalization policy was accepted & initiated. Foreign capital flows were not looked upon favorably & therefore not encouraged. If there is a deficit in the current account it was financed mainly through deft flows & official development assistance. The policy followed was one which discouraged foreign investment. However, the adverse balance of payment & the economic crisis faced by India forced India to adopt economic reforms.
Government restrictions can often result in a currency with a low convertibility.
For example, a government with low reserves of hard foreign currency often restrict currency convertibility because the government would not be in a position to intervene in the foreign exchange market (i.e. revalue, devalue) to support their own currency if and when necessary.
Convertibility is the quality that allows money or other financial instruments to be converted into other liquid stores of value. Convertibility is an important factor in international trade, where instruments valued in different currencies must be exchanged.1
Currency Convertibility means the ability to freely exchange the currency of one Member State into the currency of another Member State.
For example, a Barbadian should be able to easily purchase goods in a store in Port of Spain with his Barbadian dollars and receive his change in Trinidad and Tobago dollars.

However, this does not always happen because of the existence of two different exchange systems in CARICOM – Fixed and Floating. Currency convertibility implies the absence of exchange controls or restrictions on foreign exchange transactions.
The ease with which a country's currency can be converted into gold or another currency. Convertibility is extremely important for