India will have its own version of digital currency, which essentially would mirror the prevalent physical currency in digital form, in next fiscal, beginning April 1, announced Union Finance Minister Nirmala Sitharaman in her Budget 2022 speech on Tuesday.

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The currency, called 'digital rupee', will be issued by the Reserve Bank in digital form and will be fungible with physical currency. This Central Bank Digital Currency (CBDC) is a digital or virtual currency but it is not comparable to the private virtual currencies or cryptocurrencies that have mushroomed over the last decade.

Ajay Seth, Secretary, Department of Economic Affairs, Ministry of Finance told CNBC-TV18 that digital currency and digital rupee, which will make a start in FY23, will provide impetus to digitisation in the economy.

“Digital currency and digital rupee that is what the Reserve Bank of India using Blockchain and other technologies will come out and we will make a start in 2022-23. This will provide an impetus for digitization of the economy as well as improving upon the payment systems and so on the benefits which will arise there,” he told CNBC-TV18.

Also Read | Explained: What tax proposals on digital assets mean for cryptocurrency investors in India

Meanwhile, the government has announced that any income from the transfer of any virtual digital asset shall be taxed at the rate of 30 percent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income except the cost of acquisition. T

Though the Finance Minister did not mention cryptocurrencies or non-fungible tokens in her Budget speech, the Finance Bill makes clear the assets that fall under the purview of the proposal to tax ‘virtual digital assets.’

Seth acknowledged the discourse among stakeholders on the policy response to cryptocurrency and said he was hopeful of a discussion at the G20 meeting on the issue.

“There is a discourse happening now, among the countries, among the stakeholders, especially the institutional stakeholders, on what kind of a policy response should come on to that. We do expect that this year's the discourse during the G20, where Indonesia has the presidency this year, quite a bit of a discussion will happen on that ground,” he said in an exclusive interview.

Sanjeev Sanyal, Principal Economic Adviser, on the other hand, talked about the fiscal deficit, which he said is not out of whack with what the market was expecting.

“We have made certain assumptions on the small saving side…it is an assumption that number sometimes comes up much better as happened last year, that number came up much better therefore, we borrowed less. So, we have put an assumption you can look at it, you can decide whether it's an unrealistic assumption and then what is left is borrowing effectively is the residual,” he said.

On the supply chain, Sanyal said, India is inserting itself into the global supply chains very quickly and that shows in exports and imports.

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(Edited by : Kanishka Sarkar)

First Published:Feb 1, 2022 7:56 PM IST