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  4. Budget 2022: India to have its own Digital Currency: What FM Sitharaman said in Budget speech

Budget 2022: India to have its own Digital Currency: What FM Sitharaman said in Budget speech

Sitharaman had replaced her signature 'bahi khata', last year. Today, she opted to carry the documents in a tablet, which was wrapped in a red-coloured cover.

India TV Business Desk Edited by: India TV Business Desk New Delhi Updated on: February 01, 2022 14:02 IST
Budget 2022, digital currency
Image Source : PTI

Budget 2022: India to have its own Digital Currency 

Highlights

  • RBI will be issuing a digital rupee using blockchain and other technologies, Sitharaman said
  • The same will be issued in the Financial Year 2022-23
  • This will give a big boost to the economy, Sitharaman said today

The Reserve Bank of India (RBI) will introduce digital currency in the next financial year beginning April 2022 to boost the digital economy and efficient currency management, Finance Minister Nirmala Sitharaman proposed in her Budget 2022-23 speech on Tuesday. The introduction of a central bank's digital currency will give a big boost to the digital economy. Digital currency will also help in the currency management system, the minister said.

"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," Sitharaman said.

She also said Rs 1 lakh crore financial assistance to states will be provided in 2022-23 to catalyse investments.

The finance minister further said that in 2022-23, states will be allowed a fiscal deficit of up to 4 pc of GSDP (Gross State Domestic Product).

The minister also proposed to set up an expert committee to examine and suggest appropriate measures to scale up venture capital and private equity investment.

Venture capital and private equity invested more than Rs 5.5 lakh crore last year, facilitating one of the largest startup and growth ecosystems. Scaling up this investment requires a holistic examination of regulatory and other frictions, she said.

On blended finance, she said that the government-backed Funds NIIF and SIDBI Fund of Funds had 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 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, the minister said.

"Creation of a blockchain-based central bank digital currency while bringing virtual digital assets under the tax net at the highest rate of 30 per cent will help reduce speculative play, especially in the cryptocurrency space," Shravan Shetty, MD, Primus Partners- Digital Currency, said.

The central currency will help bring the benefit of a digital currency to the economy in a structured framework, Shetty added.

Harry Parikh, Associate Partner - M&A Tax and Regulatory Services, BDO India, said a nonchalant introduction of taxation on digital currency coupled with a withholding tax on every transaction could give rise to a lot of compliance issues for crypto businesses.

(With inputs from PTI)

Also Read | Tax deduction hiked from 10% to 14% on NPS accounts

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