Correct Option (A)
Statement I is correct. The Indian Rupee achieved full convertibility on the current account of the Balance of Payments (BoP) in 1994. This means that foreign exchange can be freely bought and sold for purposes such as trade in goods and services, remittances, and interest payments, without significant restrictions by the government.
Incorrect Options:
Statement II is incorrect. The Indian Rupee is not fully convertible on the capital account. While there has been a gradual liberalization of capital account transactions, certain restrictions remain, particularly for resident individuals and certain types of institutional flows. Full capital account convertibility would imply complete freedom for residents and non-residents to convert local currency into foreign currency and vice versa for capital transactions, such as investments, loans, and portfolio flows, without any restrictions.
Statement III is incorrect. The Indian Rupee is not directly convertible into gold. While individuals can purchase gold using rupees, there is no official mechanism for direct conversion of the currency into a fixed quantity of gold at a predetermined rate, unlike historical gold standards. The value of the rupee is determined by market forces and is not pegged to gold.