Budget 2022-23: India to launch its own Digital Currency Soon

Budget 2022: India’s central bank RBI is planning to create a digital version of the rupee in the coming fiscal year, according to the nation’s finance minister.

“The introduction of a central bank digital currency will give a boost, a major boost to the digital economy,” Nirmala Sitharaman said during the presentation of the country’s annual budget. “Digital currency will also result in a more efficient and cost-effective currency management system,” says the author. The Reserve Bank of India will launch the digital rupee in the fiscal year 2022-2023, which starts on April 1.

She also stated that states will receive Rs 1 lakh crore in financial assistance in 2022-23 to help catalyze investment. The minister also suggested forming an expert committee to look into and recommend ways to increase venture capital and private equity investment. Last year, venture capital and private equity firms spent more than Rs 5.5 lakh crore in India’s startup and growth ecosystem, making it one of the largest in the world. She believes that scaling up this investment will necessitate a thorough study of regulatory and other roadblocks.

CBDC is a digital or virtual currency, although it differs from the private virtual currencies and cryptocurrencies that have exploded in popularity over the previous decade. Because there is no issuer, private virtual currencies do not represent any person’s debt or liabilities. They aren’t money, and they aren’t even close to becoming a currency. A blockchain is essentially a digital ledger that records and tracks transactions. While such a currency has become “near-universal currently,” Sankar stated that only a few countries have even reached the pilot stage of introducing their CBDCs.

According to RBI Deputy Governor T Rabi Sankar’s recent speech: “CBDC is similar to cash issued by a central bank, but it is not printed on paper (or polymer). It is the sovereign currency in electronic form, and it would appear on a central bank’s balance sheet as a liability (currency in circulation). A CBDC’s underlying technology, shape, and application can be tailored to meet individual needs. CBDCs should be able to be exchanged for cash.”

A survey reports that central banks are attempting to popularise a more acceptable electronic form of cash as paper currency usage declines (like Sweden). In addition, authorities that use a lot of real currency want to make issuance more efficient (like Denmark, Germany, Japan, or even the US). According to Sankar, central banks should issue digital currencies to suit public demand and avoid any harm caused by the use of private virtual currencies.

Finance Secretary TV Somanathan emphasized again that the government will issue India’s very own digital currency, which will be backed by the central bank and will be legal tender, a day after Union Finance Minister Nirmala Sitharaman stated the government will issue India’s very own digital currency.

“Digital currency will be guaranteed by the Reserve Bank of India, which will never default.” The money will be issued by the RBI, but the nature of the money will be digital. The RBI’s digital rupee will be legal tender. “The rest aren’t legal tender, won’t become legal tender, and will never become legal tender,” Somanathan told ANI.

Digital currency such as Bitcoin, Ethereum, and non-fungible tokens (NFTs) will never be legal money in India, according to Somanathan. “Crypto assets are assets whose value will be determined between two people. You can buy gold, diamond, crypto, but that will have not have the value authorization by govt,” he added.