George Soros (centre) with Ficci president Saroj K Poddar (right) and Vinay Bharat Ram, chairman of the Sri Ram Centre for Industrial Relations and Human Resources, in New Delhi on Tuesday. (AFP)

New Delhi, Dec. 19: India should not go for full capital account convertibility as the economy is showing signs of overheating, said global financier George Soros.

“You (India) are in a boom economy, in a booming financial market. It’s the role of the authorities to prevent the boom from becoming excessive to avoid overheating,” he said.

On capital account convertibility, Soros said the time was not ripe for monetary reform measures that allow free conversion of the rupee into any other currency without any limits.

He was speaking at a seminar organised by the Federation of Indian Chambers of Commerce and Industry (Ficci).

His comments come at a time when policy makers in India are debating moves to make the rupee fully convertible.

Supporters of economic liberalisation argue that lifting capital account controls would make India more attractive to foreign investors and also help Indian firms doing business overseas.

Soros, however, said capital controls are effective only during crises and cannot be a perfect arrangement, adding that India was becoming a very important country and outside interest in the country was growing.

According to him, India should also “be careful about the inflow of foreign capital” that has taken the country's stock prices and foreign currency reserves to record highs.

The rupee is only partially convertible, which essentially means that most capital account transactions — investment flowing in and out of the country — are subject to approval by the central bank. Other transactions related to merchandise trade are handled at market rates and without official approval.

Responding to a query on whether he will make some investments in India, Soros refused to disclose saying his portfolio was managed by professionals.

The 76-year-old investor, who founded the Open Society Institute, also warned India that it must not get carried away with its “rapid economic development” and neglect serious issues like global warming.

“The US, instead of ignoring the issue of global warming, should rather take a lead in this,” he said. The issue, Soros said, was largely ignored in India.

“India has become close to the US during the Bush regime. I would say hunger for success is good but too much hunger leads to destruction. We should not sacrifice ethical ways of doing business,” he said.

Congratulating India for its civilian nuclear deal with the US, he said, “India's nuclear cooperation with the US is a major step toward economic growth. But it should be dealt with a viable regime and used for peaceful purposes”.

Soros, who arrived here via Lahore, also made a comparison between two of the world’s fastest-growing economies — India and China.

“China is growing faster. But India is catching up. China’s success will also be short-lived as it does not encourage freedom of speech,” he said.