Growth of Digital Economy in India

Digitalization acquires a critical element in the development of the modern economy, giving birth to an all new term- ‘Digital Economy’ as it promises to add a lot more within a short span of time. Therefore, when Prime Minister Narendra Modi says, – India’s digital economy is going to be one trillion dollar by 2025 and country’s digital economy and the infrastructure sector has a total potential for 2.5 trillion dollar, it startles very few.

Digitalization or the digital transformation of the economy is essentially introduction of information and communication technologies in a sector in order to increase its efficiency, productivity, extents and competitiveness, thereby creating an innovative high-tech digital economy. Introduction of digital technologies in various sectors of the economy, such as medicine, education, housing, community services, agriculture, manufacturing, service sector and others, is fast changing the face of these industries. However, digital transformation must be intentionally inclusive and thoughtfully designed and implemented to ensure that all are well taken care of and no one is left behind.

And in India, permeating all aspects of society and influencing the way we carry out economic activities, digital technologies are playing the role of a great equaliser by distributing the fruits of economic developments to all, thereby bringing sociological changes too. India’s inclusive digital model is narrowing the digital divide among people and bringing benefits of technology to all segments of people, as less affluent states leapfrog to catch up with more affluent ones on dimensions such as internet subscriber growth, density of internet infrastructure and common service centres.

Digital technologies such as data pooling, Artificial intelligence and others are now widely used to track and diagnose issues in agriculture, health, environment, logistics, jobs and skills market, e-governance, performing daily tasks such as navigating traffic, paying a bill, financial transactions and others. Through Digital India Programme, the Government of India is focusing much on creating a strong foundation of digital infrastructure and expanding digital access to all, creating tremendous economic value and empowerment of citizens as new digital applications permeate sector after sector. These efforts have made India the second-fastest digitizing economy amongst 17 leading economies of the world and country’s digital economy may generate productivity and output sufficient to support 55 million to 60 million workers in 2025.

India’s digital vision is based on citizen centric services, where transparency and accountability are ensured as it envisions a kind of digital transformation that allows everyone – whether in rural or urban areas and irrespective of their economic or social status, take ample benefits. However, to stay ahead in the race, we need to bring in changes in our approach to education and training by placing more emphasis on science, technology, engineering, maths, soft skills, resilience, skilling, re-skilling, up-skill of the people in general.

In human development, technology has always played a revolutionary role, changing the features of the labour force, creating a new face, form, pattern and process of works and bringing about wider economic and societal changes. Spurred by the digital revolutions, the current wave of changes appears to be having much more profound impacts over the humanity and its course than others happened in history.

Harnessing Digital Strength for Credit Delivery

Launch of recent digital platforms by the government like DigiLocker, eNAM (e-trading platform for the National Agriculture Market), AI-driven research portal SUPACE (Supreme Court Portal for Assistance in Courts Efficiency), CoWIN platform, National Single Window Platform, etc. which have worked wonders as far as information delivery, public use, notice circulations, availing services, bookings and record-keeping, etc, is concerned. These have also become a means of transparency and accessibility and even grievance addressal in some cases. The National Data & Analytics Platform (NDAP) that was launched by NITI Aayog for free public use recently, ensures the same. It makes data accessible, interoperable, interactive, and available on a user-friendly platform, which intends to democratise access to public government data. ‘Jan Samarth’ portal is yet another skyrocketing idea of the Government to cut the clutter and establish a direct connect with public.

Launching of the national portal for credit linked government schemes – ‘Jan Samarth’, may prove to be a game changer for the economy, as it gives a big boost to the inclusive growth and development of various sectors by guiding and providing the beneficiaries with the right type of government benefits through simple and easy digital processes. It promises to improve the ease of living for those who presently have to face much hassle in the lending process. In absence of human interventions in the approval – red tap, human eccentricities and corruption would cease to exist in the process, paving way for a transparent setup, greater growth of the economy and judicious and rational utilization of the human resources.

Being first of its kind platform, ‘Jan Samarth’ is a one stop digital portal linking government credit schemes, which directly connects beneficiaries to lenders. The portal ensures end to end coverage of all the linked schemes by bringing all kinds of government schemes on a single platform, making them easily accessible for the people and without much puzzle. The portal is a universal platform for delivery of various schemes being run by the various ministries and departments of the government. Working on the ideals of minimum government maximum governance, this nationwide portal plans to initially onboard 13 credit linked government schemes and the offerings will gradually be expanded, which will depend on compatibility, since a few Centre sponsored welfare and credit linked schemes involve multiple government departments/agencies/ministries.

The portal uses smart analytics and technologies that provide guidance to beneficiaries for checking subsidy, eligibility and the auto recommendation system that recommends the suitable schemes as per the requirements and credentials of the beneficiaries. The entire lending process is automated and based on digital verifications to make it simple, speedy, and hassle-free. Being integrated with the governments’ Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), the new portal helps in receiving in-principal approval of loans for MSMEs and after receiving in-approval, the loan is expected to be disbursed in a few days as the loan application process doesn’t have any human interventions, rather it depends on advanced algorithms to analyse data points from sources like income tax return, GST data, banks accounts among others.

Jan Samarth Portal has multiple integrations with UIDAI, CBDT, NSDL, LGD and other such organisations to make the processes smooth for both beneficiaries and lenders. It does enable beneficiaries to choose from multiple options being offered by various lending financial institutions on the portal. Presently, the platform has more than 10 nodal agencies and over 125 lenders with four broad loan categories – education, business, livelihood and agriculture related infrastructure loan. To avail the loan, beneficiaries first need to check their eligibility by providing answers to few simple questions under the selected loan category. When found eligible, they can proceed to provide the required details and documents. Upon submitting the details, people are recommended to select the schemes based on their needs and then they need to proceed to apply online for the selected scheme to receive digital approval.

Optimal Utilisation of Spectrum and Going Digital

To make way for the new the old has to be weaned off. New ways of content dissemination need to be explored and adapted to optimally utilize the prized resources. Spectrum being one of them. Talking about Natural Resource hardly brings attention to spectrum. But, telco revolution seen in the country and other parts of the developing world over last few decades has highlight the crucial nature of this national resource. Defining precious and priceless in the current world does culminates to spectrum, a natural resource available, exploited and in demand. And there is dearth of this exquisite resource. The haves and the have-nots both trying to secure and acquire depending on their position.

The backbone of the communication industry, spectrum plays an important role as basic support for infrastructure building and investment. Demand is ever increasing and the availability for use is highly restricted especially when talked in the context of free space. The wired backbone can support distribution from a central hub to downstream nodal hubs over the Optical fibres, or even to subscriber base but the real context is the distribution of Radio frequency spectrum in free space, the mobile cellular network, the terrestrial broadcast of Radio & Television services, satellite connectivity and direct to home.

The technological advancement which is in dire need of this resource has also provided the solution for optimum utilization of spectrum – and that is to Go Digital! Broadcast technology has also adapted itself by going Digital. The once analogy Cable TV network has now become Digital with not only the quality enhancement but also statistics generation for the subscriber base and their preferences. Television broadcasters have gone digital with the Direct to Home(DTH) technology.

Earlier where with analog transmission a bandwidth of 36MHz was required for quality transmission of one analog channel through satellite link, the current scenario is 20 to 24 TV Channels being combined digitally in the same 36MHz spectrum bandwidth. Further for pan-India connectivity for any content the need was for a large matrix of transmitter as one TV transmitter had a coverage range of around 70 Kms.

DTH has been a major effort by the Public Broadcaster in paving way for release of the crucial resource. Old and the outdated technology also lacks the industry support. As a service to the Nation, the Analog Terrestrial Transmitters of Prasar Bharati are being switched off to not only release the much demanded spectrum but also to pave way to the regional language services availability across the footprint. Dr L Murugan, Minister of State, Information & Broadcasting has rightly stated in his tweet on the 25 successful years of TRAI “On the occasion of its silver jubilee, addressed the officials today. Elaborated upon reforms undertaken at Doordarshan and how phase-out of Analogue Terrestrial Transmitters has resulted in availability of valuable spectrum.”

Another key development in the broadcasting scenario is the launch of Digital services over the IP Network. A network which has potential to add bandwidth being rigged as a cluster of Optical Fibres and Satellites. Digital over IP has a further significance in its reach, whereas in Terrestrial relay the reach depends on the hight of the tower and the power of the transmitting setup, and in satellite relay the reach is limited to the footprint area, the reach over the IP Backbone can be considered infinite on account of its availability across the World Wide Web. And, the current initiative of the Government of India to reach one and all in India and build brand India globally with timely and accurate information dissemination, Prasar Bharati News Services & Digital Platform (PBNS) has been continuously edging towards a meaningful presence for the people of India and the global Netizens.

Comeback of Regional Languages in Digital World

Language is the most potent and important invention of ingenious mankind. Languages are the tool to code the stories of human endeavours evolving over edges. The diversity of languages around the globe beautifully signify the versatility, uniqueness and robustness of human societies. India is blessed with a heritage which nurtures diversity and its languages. As smartphones penetrate their way into even the remotest areas across the globe, a new market space is being created for different sectors, especially tech-based firms. Not only are the Hyperlocal trends and cultures being brought to the fore but regional populace is being observed and listened to like never before. Thus, regional relativity and digital connectivity together have made the need of running services multilingual, almost immediate.

Global-Tech and electronic giants, media firms, publishing houses, etc. are interested in Indian markets because of the untapped potential here and wide range of target group and consumer base. With more and more exposure to globalisation, digital gadgets, online buying and selling, social networking and strengthening of the digital payments ecosystem, Indian citizenry is waiting for seamless services and flexibility. The readiness is bringing up new multilingual versions of services across almost all sectors giving Indian culture and languages a special priority and global recognition. This will also result in more and more startups in India, more employment, better educational landscape, more networking, branding and advertisement, enhanced digital banking and mobile penetration, better digital literacy, all contributing eventually in boosting India’s economy exponentially.

The Linguistic Divide is bigger than the Digital Divide but the digital infrastructure is responsible for bridging the gap to create a bigger impact. India is a country with around 425 different languages and dialects. India also has a huge base of internet subscribers and the lack of content in local languages means that users’ experience is highly impacted. Aligning with this, recently Google has announced the addition of eight Indian languages including Sanskrit to Google Translate, with the view to increase the number of regional languages supported by its online multilingual translation service. Besides Sanskrit, the other Indian languages in the latest iteration of Google Translate are Assamese, Bhojpuri, Dogri, Konkani, Maithili, and Meiteilon (Manipuri), Mizo and Sanskrit. This update is part of a bigger plan wherein Google is further expected to add 24 Indian languages to Google Translate, which now supports a total of 133 languages used around the globe. In terms of the technology, these are the first languages that have been added using the zero-shot machine translation, where a machine learning model only sees monolingual text, meaning it learns to translate it into another language without ever seeing an example. Although Google says that this technology is not perfect but the company is working towards improving it. Though this update will only be supported in the text translation feature for now, Google may also work on rolling out voice to text, camera mode, and other features too.

Digital Advancement & Innovations in Health Sector

India fought an unprecedented battle to overcome the systemic challenges induced by the COVID-19 pandemic. From expanding the healthcare infrastructure both physically and digitally to establishment of more and more AIIMS in the country at an unbelievable pace to achieving remarkable feats with the rollout of Vaccine Maitri Initiative and attaining the status of being called the ‘Pharmacy of the World’, India has emerged as the ‘Vaidya’ of the World, the knower of Health Sciences. Providing quality healthcare services to citizens during Covid was the central goal of the Indian government along with a focus on capacity building, which further helped New India to strengthen the healthcare sector in various domains.

Digital Health is one such area, where India is building strongholds to stand prepared for any future crisis. Today, the country’s healthcare is being imbibed with facilities like telemedicine and innovative methodologies that not only benefit patients but ease up service delivery for the pharma sector. India started e-Sanjeevani, a first-of-its-kind telemedicine initiative by any country during the covid pandemic, that has revolutionised the teleconsultation structure for all across the country. The success of this platform’s robust technology speaks for itself. In April 2022, the country achieved the milestone of a record 3.5 lakhs tele-consultations on a single day! Teleconsultation is possibly the future of India’s health systems, the concrete path towards establishing it has already been laid through Ayushman Bharat-Health and Wellness Centres that extend e-Sanjeevani services and facilitate a perfect platform to provide health services to the last mile.

India’s Unified Health Interface provides for an open network designed to enable interoperable digital health service delivery. Last year, PM Modi announced the roll-out of Digital Health IDs under the Ayushman Bharat Digital Mission ( ABHA) which came out as another push towards building the Digital Health ecosystem of the country. Under this mission, 21.6 crore ABHA health IDs have been created and more than 26,000 health facilities have been connected so far.

Digital health innovations are being endorsed like never before as they assist in saving time, boosting accuracy and efficiency. With Artificial Intelligence, India is combining technologies in ways that are new to healthcare. NIRAMAI a startup based in Bengaluru designed an AI-Based screening device that can detect breast cancer at a much earlier stage than traditional methods or self-examination. Indian startups like these have put the nation on the world map of AI with their innovative technique. During the COVID period, CoWin platform, Arogya Setu, innovative PPE Kits, testing kits, advanced masks, etc. were some of the need-based innovations made by the National Health Authority, premiere institutes, and startups across the nation. Such breakthroughs aided by the government’s policy initiatives ensure that India will leapfrog in the digital space by leveraging technologies that provide digital services.

India’s leap in digital payment paradigm

“Many countries praised the CoWin app, which was created for vaccination during the first COVID period and Nepal has now adopted India’s UPI for digital transactions. It will bolster interoperable real-time person-to-person (P2P) and person-to-merchant (P2M) transactions,” said a PIB release breaking the news of Nepal adopting India’s UPI for digital transactions. The development comes days after tourists & migrants to the United Arab Emirates with Indian bank accounts became eligible to do payments via UPI at various shops, retail facilities and other merchants in the UAE. Apart from these two nations, UPI Global is already live in Singapore and Bhutan, and would enable Indian travellers to make easy payments.

The scale and speed with which UPI operates in India is unprecedented with over 155 banks currently live on the UPI platform. UPI had enabled 39 billion financial transactions amounting to commerce worth $940 billion in the year 2021, a figure equivalent to around 31% of India’s GDP. As per recorded data, such a massive number of transactions haven’t happened on a single platform anywhere in the world. BHIM-UPI even achieved a record of 452.75 crore digital payment transactions to the tune of Rs 8.27 lakh crore till February 28, 2022.

To take digital payment to every nook and corner of the country, various steps have been taken by MeitY. Incentive schemes like the promotion of RuPay Debit cards and low-value BHIM-UPI transactions (P2M) facilitate Banks in building a robust digital payment ecosystem, promoting RuPay Debit cards and BHIM-UPI digital transactions, across all sectors and segments of the population, and further deepening digital payments in India. Additionally, Incentive/cashback schemes were launched by MeitY for changing the customer/merchant behavior for faster adoption of digital payments in India. Some of them were BHIM Cashback schemes for Individuals & Merchants, BHIM Aadhaar Merchant Incentive Scheme, BHIM-UPI Merchant Onboarding Scheme Merchant Discount Rate (MDR) Reimbursement scheme. Another step towards improving digital infrastructure was the scheme titled “Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA)” to usher in digital literacy in rural India.The introduction of QR scanning for making digital payments has also contributed to increasing the number of digital payments over the last few years because of the added ease and flexibility.

The success lies in the flexibility as UPI offers users to pay through easy QR codes and quick PINs, while the world still struggles and stays on traditional methods, such as card systems, which are still dominant in developed states across the globe. Check payments are still very common in various parts of the European countries. UPI is simple and doesn’t require users to carry anything extra other than their smartphones. RuPay and UPI, together are beating cash and card-based transactions in the country with whopping margins. The continuation of this trend may lead to them taking over the global competitors like American express, VISA and Mastercard, and other Global Giants that have ruled the Indian payment systems for decades. UPI is becoming popular in other foreign countries at a right time, as absence of a similar Open, Simple & Powerful payments interface may leverage India’s position in the foreign markets.

Protecting Rights of Digi-Consumer

The definition of consumerism has changed as the world scouts through technological leaps, digital deliveries, virtual reality, booming entrepreneurship and compound collaborations. All these undertakings have opened gates to many new facets of consumerism, presenting both opportunities and alarms. In 2021, retail e-commerce sales amounted to approx. 4.9 trillion U.S. dollars worldwide, thanks to the pandemic-induced digital activities around the globe. This figure could reach about 7.4 trillion dollars by 2025. While non-physical buying like e-commerce, social media shops, stocks & insurance, tickets & bookings, infotainment subscriptions, e-property dealings etc. grows outrageously, the absence of centralised prescribed rights of the digital buyers & consumers is adding to the backlog of cases and issues which may jeopardise global future endeavours.

The requirements are not just regarding not just the grievance reddressal of the e-buyer(s) but also their data protection and digital security. One could refer to the ‘Right to be forgotten’ on these lines, which empowers individuals to ask organisations to delete their personal data. The concept has been discussed and put into practice in several jurisdictions, including Argentina, the European Union (EU), and the Philippines. The European Court of Justice, in fact, legally solidified the “right to be forgotten” as a human right when the court ruled against Google in the ‘Costeja’ case in May 2014. Such a right can be a good point to start with for India too, which however, has much more complex systems, restrained resources and a flood of data breach cases waiting for just a proper redressal system to be in place.

The recent release of the detailed guidelines by RBI are an effort worth appreciating. The guidelines aim to strengthen India’s digital payments structure and improve security, control and compliance among banks, gateways, wallets and other non-banking entities that are contributing for India to meet its goal of going cashless. The new rules come at a time when India’s payments ecosystem is also vulnerable to frauds and cyber breaches.

RBI’s efforts for consumer protection had begun in 1995 with the setting up of the Complaints Redressal Cell. Later, three Ombudsman schemes of RBI namely the Banking Ombudsman Scheme (2006), the Ombudsman Scheme for Non-Banking Financial Companies (2018) and Ombudsman Scheme for Digital Transactions (2019) were launched. These three were merged to launch a more systematic and centralised scheme i.e. the Reserve Bank – Integrated Ombudsman Scheme (RB-IOS) in November 2021. Some other steps by RBI include launch Complaint Management System (2019) and formulation of the Charter of Customer Rights, etc.

When it comes to traditional buying also, India has taken various measures to safeguard the consumer rights of the citizens. At top of this, is the Consumer Protection Act, 2019 that provides for the establishment of three-tier quasi-judicial machinery, called Consumer Commissions, to provide simple and speedy redressal of consumer disputes. Further, provisions have been made for e-filing and e-payment, video conferencing based hearing, court-monitored mediation, etc. to facilitate early disposal of cases. The Act also lays down provisions for E-Commerce Rules, 2020 and Direct Selling Rules, 2021. As per the latest data available, there are 632 Consumer Commissions operational in the country. 2,83,889 cases were disposed of from 2019 to 2021. As for the enhancement of consumer grievance redressal mechanism, the Department of Consumer Affairs has expanded “E-Daakhil” facility across 11 more states/UTs in the last one year (facility available now in total 23 states/UTs). Helpline number of the National Cyber Crime Reporting Portal ( i.e. 155260) has also been added to the NCH portal for filing grievances relating to financial cyber frauds.

Building Cyber Sustainable Solutions

With growing digital indulgence and technological shift, the matters of privacy and secured networking and storage channels also become of prime importance and require equally robust support systems and mechanisation. Building and replicating a technology is one challenge. Another challenge, rather trickier one, is posed when all these technologies get interconnected to form a web of the country’s total digital & cyber undertakings and the state is met with piling needs to protect its cyber net. This vulnerability gives birth to the need of developing strong data protection systems and technologies.

One such data protection solution is the technology of ‘Quantum key distribution’ (QKD) which is a secure communication technology that uses quantum physics to construct a cryptographic protocol. It allows two parties to generate a shared secret key that is only known to them and can be used to encrypt and decrypt messages. For the first time in India, a team of DRDO scientists and IIT Delhi successfully demonstrated a Quantum Key Distribution (QKD) link between Prayagraj and Vindhyachal in Uttar Pradesh spanning over 100 kilometres, using a commercial-grade optical fibre that was already on the market. In the test runs, the performance parameters for this QKD were found to be repetitively within the reported international standards at sifted key rates of up to 10 KHz.

With this breakthrough, the country has demonstrated its own secure key transfer method, which can be used to bootstrap a military-grade communication security key hierarchy. The QKD technology will further enable India’s security agencies to plan a suitable quantum communication network with indigenous technology backbone.

A report by the Data Security Council of India (DSCI) highlighted India’s remarkable growth in the cyber space. It said that India’s cyber security industry nearly doubled in size amid the pandemic, with revenues from cyber security products and services growing from $5.04bn in 2019 to $9.85bn in 2021. India, its startups, various industries and public & private institutions are also getting acquainted and/or working on other tech-solutions and systems like the blockchain technology, Digital Forensics Technology, modern data science tools, vulnerability assessment & penetration testing tools and solutions, etc.

To build even better capacity towards this, the government has been making relevant provisions in the budget and various policies. Budget 2022, under GIFT-IFSC, talked about Data Centres and Energy Storage Systems including dense charging infrastructure and grid-scale battery systems to be included in the harmonized list of infrastructure. This will facilitate credit availability for digital infrastructure and clean energy storage. It also mentioned Blended Financing solutions where Government backed Funds like ‘NIIF’ and ‘SIDBI Fund of Funds’ have provided scale capital creating a multiplier effect. For encouraging important sunrise sectors such as Climate Action, Deep-Tech, Digital Economy, Pharma and Agri-Tech, the government proposes to 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.

Digital Rupee vs RBI’s CBDC

Digital transactions in India are seeing unprecedented growth and indeed for a large chunk of the population, rupee has become digitised. In this context, RBI’s Central Bank Digital Currency (CBDC) becomes nuanced for really appreciating its usefulness. One advantage of digital currency could be segregation of spending from savings. CBDC is likely to act as only a spending instrument, and become the catalyst for efficiency enhancement of the informal sector.

Presently, ₹ is both an instrument of savings as well as for spending, and the dual role makes the availability of banking services vital for efficient business operations. Present digital transactions are facilitated by commercial and other banking service providers. This leaves unbanked or difficult banking experiencers like those dwelling in slums and remote villages vulnerable to the VUCA world.

One of the unfortunate realities of rapid pace of urbanisation is slum dwelling in Cities. People migrating from rural settlements to more informal settlements in and around the city in bids to find work are subjected to a highly volatile business environment. Even if there is no wage or price earning opportunity, informal sector workers still have the goods and services to offer to each other, but nobody has money to pay for them. With no buffer and no surplus money to inject into the informal sector, availability of wage earning tasks in season and thereafter no source of income creates huge uncertainty. This is where a coupon-like setup provided by CBDC can save the day. One underlying case study can be the use of Bangla Pesa in Kenyan slums.

As Bangla Pesa is entering the 10th year of its existence, it has become a role model for poverty alleviation. Mombasa has more than 60k Bangladeshi slum dwellers who have used a complimentary voucher system by the name of Bangla Pesa which uses M-Pesa APP to transact in this alternative currency. Slum dwellers had goods and services but no money at all, thereby wasting time and rotting goods. Bangla Pesa came into being as a real measure of value of goods and services allowing a barter system to evolve instead of wasted opportunities. Users say that, “You can’t steal Bangla Pesa and it has no corruption. You take money to get rich but not to eradicate poverty. Use of Bangla Pesa indicates somebody who doesn’t have money is going to get help.”

Use cases of CBDC can be built around the experiences of Bangla Pesa. Not to mention that RBI taking direct liability and making this token based, solves a major issue of cryptocurrencies i.e. Transactional Privacy. DBT transactions can become more efficient and effective using such CBDC and not to forget the benefits manifesting to a local villager who will no longer need to travel distances to receive cash from the bank and also pay high percentages as remittances charges.

RBI Digital Currency

“Introduction of Central Bank Digital Currency (CBDC) will give a big boost to the 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 2022-23.” FM Nirmala Sitharaman announced during her budget 2022 speech. Apart from RBI, Central Banks of Singapore, Thailand, Sweden, England, Canada, Venezuela, Uruguay, and a few other countries have been working towards implementing respective Central-bank-backed digital currencies.

It was a big leap in human civilisation to move away from the barter system towards a centralised monetary system, which has started with Gold and other kinds of coins had moved on to gold-backed legal tenders, and finally evolved into a Fiat currency. Rather than equivalent gold holding, a Fiat currency is backed by full faith and credit of the issuing government of the Reserve Bank or Central Bank of the country. Transactions in these Fiat currencies happen in physical notes and coins form or via a bank account, for on paper or digital transactions. A CBDC is in the token form of Rupee. It is an electronic record of the country’s official currency and can prove to be crucial towards goals of financial inclusion. Transactions of a CBDC do not necessarily need one to have a bank account.

Financial inclusion is critical for strengthening the abilities of the poor to tap all opportunities to come out of poverty, and to a vast majority in India, the middle class, to fruitfully utilise nurturing ecosystem of entrepreneurship and skill development in their chosen domain. The zero balance requirement concept for bank accounts opened under Prime Minister Jan Dhan Yojna has been critical in bringing banking services to millions of unbanked Indians. RBI-Digital-Currency will be truly a shot in the arm to the efforts of bringing the unbanked into the financial system. As FM noted, the added benefit of the CBDC would be simplifying the implementation of monetary and fiscal policies and a more efficient and cheaper currency management system.