In this article for Mint, Nikita Kwatra, Hemant Adarkar and Vikram Sinha, discuss three issues that need to be addressed before launching the digital rupee.
“The need assessment and motivations in India are different. For instance, while other countries, even developed economies, might see CBDCs as a means of promoting digital payments, that is not particularly relevant when we have an efficient, inclusive consumer payment system in the unified payments interface (UPI).
India’s UPI landscape has grown tremendously in the last half-decade from just 21 banks with a transaction value of ₹3.8 million in July 2016 to nearly 300 banks with a transaction value of ₹8.3 trillion as of January 2022, data from National Payments Corp. of India shows. Innovations like e-Rupi, a cashless and contactless prepaid voucher-based payment instrument built on the UPI platform, also extend benefits to ‘non-banked’ beneficiaries. Even if CBDCs could increase inclusiveness a bit more, it would be on the margins and would need to be carefully weighed against the potential benefits.”
Read the full article here.
Note: This work was done by the author/s when they were a part of the IDFC Institute and is republished here with permission.
