Eco Survey: Scope Of Pilots Being Slowly Expanded For Full Operationalisation Of CBDC

SUMMARY

Introduction of CBDC will significantly boost digital financial services and offer benefits such as reduction in operational costs for cash management: Economic Survey

The CBDC has the potential to lay the framework for another generation of financial innovations, the Survey said

Last year, the RBI began the pilots of digital rupee for both wholesale and retail segments and said it would expand the use cases based on the learnings

The Reserve Bank of India (RBI) is gradually expanding the scope of the pilots for Central Bank Digital Currency (CBDC) to include more banks, users, and locations based on the feedback received during the pilots, the Economic Survey 2022-23 said.

“The introduction of CBDC will significantly boost digital financial services. Issuance of CBDC in India offers several benefits, which inter alia, include reduction in operational costs involved in physical cash management, fostering financial inclusion, bringing resilience,” the Survey said.

The Economic Survey, tabled by Finance Minister Nirmala Sitharaman in the Parliament on Tuesday (January 31), ahead of the presentation of the Union Budget 2023-24 on Wednesday, is a flagship document of the Ministry of Finance which discusses the state of the economy, achievements, and challenges, among others.

This year’s Economic Survey was prepared under the leadership of Chief Economic Advisor V Anantha Nageswaran.

The Survey said that the CBDC has the potential to lay the framework for another generation of financial innovations.

The central bank rolled out the pilots of the digital rupee for both the wholesale segment and the retail segment in the latter half of 2022. State Bank of India, Yes Bank, IDFC First Bank, ICICI Bank, Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank were already identified for the phase-wise pilots.

Earlier, the RBI said that it would expand the use cases of the CBDC based on the learnings from the wholesale and retail pilots.

In a latest development, digital payments solutions startup Infibeam Avenues said that it has processed the first batch of CBDC transactions for online retail users. Meanwhile, voice-focused payments solution startup ToneTag also said that it has partnered with IDFC First Bank to enable acceptance of digital rupee at its merchant outlets.

Highlighting the efforts of other countries to introduce their CBDCs, the Survey said that 105 countries were in the process of exploring the CBDC as of July 2022, a number that covers 95% of the global Gross Domestic Product (GDP).

While the Indian government is trying to further boost its digital payments ecosystem with the introduction of the CBDC or digital rupee, the space has grown exponentially over the past few years on the back of the Unified Payment Interface (UPI).

The Economic Survey 2022-23 said that the UPI accounted for 52% of the total 8,840 Cr financial digital transactions in FY22.

Besides, the recent launch of the Open Network for Digital Commerce (ONDC) is also playing a significant role in democratising digital payments, enabling interoperability, and bringing down transaction costs, it added.