Indian Finance Minister N. Sitharaman has spoken to the press about the digital rupee a few times now. Though the details of the rupee are not entirely clear, the general outlines of the new currency regime have been widely disseminated. Over the course of 2022 and 2023, India will start issuing a proprietary, block-chain-based currency. This will be largest public use of blockchain technology seen so far. After all, India is the second-largest nation in the world by population.
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India: A Nation That Learned To Love Digital Banking
Sitharaman will soon announce the name of India’s new currency. Although the digital rupee may be new, Indians are no strangers to adaptation and change when it comes to currency. In 2016, Prime Minister Modi shocked the Indian public by announcing a massive recall of rupee bank notes. Citizens had little advance warning about the impending change.
When Modi announced the measure, it was billed as an attempt to “surgically” target corrupt officials and tax evaders. However, the disruptive effects of the recall proved to be all too universal. At the time of the announcement, almost half of Indians lacked bank accounts. Indians immediately downloaded online banking apps in the tens of millions. Though it’s questionable if the incident burnished Modi’s reputation, it made India a leader in digital payments overnight.
Crypto has finally been assured a place in India. It has been a long wait for India’s cryptocurrency and Blockchain-friendly investors. For years, the Indian Government issued warnings about the perceived dangers of cryptocurrency. Indian ministers were under pressure to square their Blockchain-wary stance with their ongoing “digital India” initiative. While trying to emphasize India’s potential for technology investors, India officially seemed out-of-touch with the interests driving technology investment. This all appears to be changing as India embraces blockchain in a big way.
Increasing Banking Coverage Through Diverse Regions and Socioeconomic Sectors
Crucially, the Indian government is not forgetting the democratizing promise of digital banking. In addition to the digital rupee, India will soon open 75 digital banking hubs in 75 separate Indian districts. While not as flashy as the digital rupee, this new retail banking initiative is an important part of India’s “digital India” strategy. Though India is a country doing well in several development areas, it’s no secret that inequality and social immobility mar India’s future outlook.
In a recent press conference, Sitharaman affirmed that all crypto income will be taxed at the flat rate of 30 percent. Furthermore, Sitharaman claimed that the government would not allow any special allowances or exemptions when taxing such income. This should put paid to any fears that the digital rupee is a mere buzzword initiative for a rarified audience of Indian investors. Apparently, India will remain committed to funding the progressive social programs that have built this nation’s reputation.
Blockchain: Allowing New Levels of Safety and Transparency
The corruption analysts at Global Financial Integrity estimated that approximately $50 billion in illicit payments leaked out of India in 2013. Influence peddling and cash bribes are daily facts of life for many Indian politicians, officials and business executives. Blockchain could be the key to making Indian finances safer and more transparent.