Budget 2022: Digital Rupee based on blockchain to be introduced this year

New Delhi, Feb 01: Finance Minister Nirmala Sitharaman has announced that the Reserve Bank of India will be introducing the 'digital rupee' using blockchain tech over the coming year.

Presenting budget 2022, Sitharaman said "Digital rupee to be issued using blockchain and other technologies; to be issued by RBI starting 2022-23. This will give a big boost to the economy."

The finance minister also said a 30 per cent tax on proceeds of virtual or digital assets.

She elaborated that introduction of Central Bank Digital Currency (CBDC) would give a big boost to digital economy. "Digital currency will also lead to a more efficient and cheaper currency management system", she said.

She further proposed various other initiatives to boost investment and credit availability in the country.

Infrastructure Status

Sitharaman proposed that the Data Centres and Energy Storage Systems including dense charging infrastructure and grid-scale battery systems would be included in the harmonized list of infrastructure. "This will facilitate credit availability for digital infrastructure and clean energy storage", she said.

Venture Capital and Private Equity Investment

The Finance Minister proposed setting up of an expert committee to examine and suggest appropriate measures to scale up Venture Capital and Private Equity investment. She noted that the Venture Capital and Private Equity invested more than Rs. 5.5 lakh crore last year facilitating one of the largest start-up and growth ecosystems. "Scaling up this investment requires a holistic examination of regulatory and other frictions", she said.

Blended Finance

Smt. Sitharaman said that the Government backed Funds NIIF and SIDBI Fund of Funds had provided scale capital creating a multiplier effect. She said that for encouraging important sunrise sectors such as Climate Action, Deep-Tech, Digital Economy, Pharma and Agri-Tech, the government would promote thematic funds for blended finance with the government share being limited to 20 per cent and the funds being managed by private fund managers.

Financial Viability of Infrastructure Projects

The Finance Minister said that for financing the infrastructure needs, measures would be taken to enhance financial viability of projects including PPP, with technical and knowledge assistance from multi-lateral agencies. She further said that enhancing financial viability shall also be obtained by adopting global best practices, innovative ways of financing, and balanced risk allocation. "Stepping-up of public investment will need to be complemented by private capital at a significant scale", she stated.

The RBI had said in July last year that it was working towards its own digital currency.

The RBI has repeatedly reiterated its strong views against cryptocurrencies, saying they pose serious threats to the macroeconomic and financial stability of the country and also doubted the number of investors trading on them and their claimed market value.

RBI Governor Shaktikanta Das too had reiterated his views against allowing cryptocurrencies, saying they are a serious threat to any financial system since they are unregulated by central banks.