India gearing up Central Bank Digital Currency for cross-border payments

by Sanath Nanayakkare

Indian Finance Minister Nirmala Sitharaman has recently said that the Government of India and the Reserve Bank of India (RBI) are actively working to improve Central Bank Digital Currency (CBDC) for cross-border payments.

“This development aims to expedite transactions at a reduced cost, making inward and outward remittances more affordable, she has said, according to The Economic Times.

As per the latest official announcement, the Indian Interim Budget for the financial year 2024-2025 has been scheduled to take place on February 1, 2024. This budget is an important event in India’s economic calendar as it outlines the government’s revenue and expenditure plans for the upcoming financial year.

Speaking at an event last week, Sitharaman referred to Indian Prime Minister Narendra Modi’s recent statement on four target groups, stating that the focus would be on their upliftment without considering caste, community, or religion. Accordingly, the Indian Government’s policies would prioritise the welfare of youth, women, farmers, and the poor in the upcoming interim Budget, to be presented in parliament.

The union minister also highlighted the government’s efforts to enhance skilling, improve agricultural tools, and provide healthcare and other benefits to citizens.

“Make sure everybody who’s actually eligible to get those should get it and equally make sure that every local talent, every product that comes out should find access to markets,” she added.

Addressing concerns about the Indian economy, Sitharaman countered the narrative that it is not performing well.

Despite India being the fastest-growing major economy and witnessing positive performance in companies and the stock market, there is a misleading perception that the Indian economy is “sick.”

Sitharaman challenged those making such claims to provide evidence for their assertions. “I want them to stand up and say on what basis are they saying it, but they won’t be available for you to answer. They throw that idea and go away,” she said.

The RBI has conducted successful pilot projects on central bank digital currency, leading to the conviction that it can be an effective mode for cross-border transactions.

In October 2023, Indian Reserve Bank Governor Shaktikanta Das emphasized that while paper currency would continue to exist, central bank digital currency would be the future currency worldwide.