Finance minister Nirmala Sitharaman during her budget speech 2022 announced that the reserve bank of India will launch its own digital rupee on to their learn with the print. We understand, what is a digital rupee? digital rupee or central bank digital currency CBDC is similar to a fiat currency which is issued in paper and is interchangeable with any other fiat currency.
So what is the need of the CBDC the shift can ensure users get efficiency conveniency and security of digital mode, while not disturbing the regulated circulation of our traditional banking systems. Unlike cryptocurrencies like bitcoin. Digital rupee will not be truly decentralized in nature as its issuance and distribution will be controlled by the RBI.
So the government of india is paying a lot of attention on digitization there are a lot of pointers which have been given by the finance minister of india which directly takes us to the fact. India is now moving towards a digitized future number one a digital university will be set up by the government of India in order to help students in fact in order to help everyone to sit in the comfort of their homes and take online classes.
Number two the government is now going to take tax on all the digital assets which are transferred from one person to another apart from that the government has also announced that now reserve bank of India will roll out indian rupee a digital currency. Which will be regulated by the central bank.
How digital rupee will be different from cryptocurrency
Digital currency or rupee is an electronic form of money, that can be used in contactless transactions. Presenting Union Budget 2022, Finance Minister Nirmala Sitharaman announced that the Reserve Bank of India (RBI) would be rolling out its digital currency soon.
Now there are a lot of benefits of this digital currency which will be based on the blockchain method number one there will be a huge huge drop in the usage of cash I mean we know we understand that the indian market is like that where cash will never disappear in any market cash cannot disappear completely but one point has to be made absolutely clear that the usage of this digital rupee which is regulated by the central authority. The chances of using cash will go down and it will be more regulated the payments will be more regulated.
It will be easier to keep track of the cost to print all the notes which is very very high will also go down substantially as people will come and take use of this technology more and more. However many experts have also find that the use of this digital cryptocurrency can also be underutilized or can be utilized negatively. So we have to take care of a lot of aspects as far as the security of this method is concerned but apart from that they are opining that this is a very good move by the government of india.
Difference between digital rupee and cryptocurrency
The Fundamental difference between the digital rupee and cryptocurrency will be that the digital rupee, being issued by RBI will most likely be Centralised. On the other hand, Cryptocurrencies are decentralised and can not be controlled by a single entity, said Vinshu Gupta, Founder and Director, Nonceblox Blockchain Studio.
The government of India is looking into the future they are not stagnant they are not thinking about just what is happening at this point of time they are looking ahead they are looking at the digital future the world is moving towards that particular aspect and in that particular group coming up with a digital currency.Based on the blockchain method in order to remove or in order to at least keep the private players at bay which can greatly disrupt the indian economy in the indian market the government of india has sure come up with a good with a very good solution in fact but it will be interesting to see how well they are able to implement this in reality.
IS IT BETTER THAN OTHER FORMS OF DIGITAL PAYMENTS?
introduction of a central bank digital currency will give a boost a big boost to digital economy digital currency will also lead to a more efficient and cheaper currency management system it is therefore proposed to introduce digital rupee using blockchain and other technologies to be issued by the reserve bank of india starting 2022 and 23 financial assistance to states for capital investment reflecting the true spirit of cooperative federalism.
The central government is committed to bolstering the hands of the states in enhancing their capital investment towards creative creating productive assets and generating remunerative employment the scheme for financial assistance to state for capital investment has been extremely well received by the states in deference to the requests received during my meeting with the chief ministers and state finance ministers.
The outlay for this scheme is being enhanced from 10 000 crores in the budget estimates to 15 000 crores in the revised estimates for the current year for i’ll repeat that sentence for the benefit of many of our honorable members in deference to the requests received from received during my meeting with chief ministers and state finance ministers.
HOW WILL CBDC CHANGE MONETARY POLICY?
Historically, monetarists targeted the supply of broad money through bond purchases, sale and purchase of currencies and tinkering with the reserve ratios of banks. But the demand for money became unstable when finance got globalised at the beginning of the ‘90s. This forced central banks to target interest rates. Now with CBDCs, they could assess demand for money and get a better handle on their policies.
The outlay for this scheme is being enhanced from ten thousand crores in the be to fifteen thousand crores one five thousand crores in the array of the current year for 2223 the allocation is one lakh crore to assist the state in catalyzing the overall investments in the economy.
Conclusion of CBDC
These 50-year interest-free bond loans are over and above the normal borrowings allowed to the states are over and above the normal borrowings to the state this allocation will be used for bmpm shakthi related and other productive capital investments of the states it will also include components for supplemental funding for priority segments of pm grant sadaq yojana including support for the state share digitization of the economy including digital payments and completion of ofc network and reforms related to building by-laws town planning schemes transit oriented development and transferable development rights