The Indian government has recently been pushing for the adoption of the e-RUPI, the country's digital currency. But Why?
This move has been met with both excitement and skepticism, with many questioning the need for such a currency and the potential challenges it may face. However, the government insists that the e-RUPI is essential for the country's economic growth and development.
One of the main reasons for the government's promotion of the e-RUPI is to combat the issue of black money, which is a significant problem in India. Black money refers to the proceeds of illegal activities that are hidden from the authorities to avoid taxation. This illicit wealth is often stashed in foreign bank accounts or invested in real estate, gold, or other assets.
Government estimates that around $500 billion worth of black money is circulating in the country.
The e-RUPI would help curb this problem by providing a transparent and traceable digital payment system. Unlike physical cash, which can be easily hidden and transferred, digital transactions leave a clear audit trail. This would make it much harder for individuals to engage in illegal activities and evade taxes.
Furthermore, the e-RUPI would also help the government to tackle corruption. In India, corruption is widespread, with public officials often demanding bribes for services that should be provided for free. The use of digital currency would reduce the need for cash transactions, which are often the source of corruption. It would also make it easier for the government to track and investigate corrupt practices.
Another key benefit of the e-RUPI is its potential to boost financial inclusion. In India, only around half of the population has access to formal banking services. This means that a significant portion of the population is unable to access credit, save money, or invest in financial products. The e-RUPI would provide an alternative to traditional banking, allowing more people to participate in the financial system. This could help to reduce poverty and inequality, as well as stimulate economic growth.
The e-RUPI would also make it easier for the government to implement monetary policies. Digital currencies can be easily controlled and manipulated by central banks, allowing them to adjust the money supply and interest rates in response to changes in the economy. This would give the government more flexibility and control over the financial system, enabling it to respond to economic shocks and maintain stability.
In addition, the e-RUPI would also improve the efficiency and speed of financial transactions. Digital currencies can be transferred instantly and at a much lower cost than physical cash. This would make it easier and cheaper for individuals and businesses to make payments, which could stimulate economic activity and increase productivity.
Despite these potential benefits, the e-RUPI is not without its challenges. One of the main concerns is the security of digital transactions. While digital currencies are generally considered to be secure, there have been instances of hacks and cyber attacks in the past. The government will need to ensure that the e-RUPI is protected from such threats and that users can trust the system.
Another potential issue is the lack of infrastructure and awareness. In order for the e-RUPI to be successful, a significant number of merchants and consumers will need to adopt it. This will require a significant investment in infrastructure, such as point-of-sale terminals and online payment systems. The government will also need to educate the public about the benefits of the e-RUPI and how to use it.
Overall, the Indian government's promotion of the e-RUPI is aimed at addressing some of the key challenges facing the country, such as black money, corruption, and financial inclusion. While there are certainly challenges to overcome, the potential benefits of the e-RUPI make it an exciting and promising development for the Indian economy.