Convertibility of rupee implies

1. Convertibility of rupee refers to the freedom to convert the Indian rupee into foreign currencies and vice versa for various transactions. 2. Option (C) accurately defines this concept as 'freely permitting the conversion of rupee to other currencies and vice versa'. 3. Option (A) relates to the historical gold standard, where currency was directly backed by and convertible into gold, which is no longer the case. 4. Option (B) describes a floating exchange rate system, where the value of the rupee is determined by market forces (demand and supply). While related to convertibility (especially full convertibility), it defines the exchange rate mechanism, not convertibility itself. 5. Option (D) refers to developing a foreign exchange market within India, which is facilitated by convertibility but is not its definition. 6. Convertibility can be on the current account (for trade, remittances, etc.) or the capital account (for investments, loans, etc.). India currently has full convertibility on the current account and partial convertibility on the capital account.