The Digital Rupee, presented in the Union Budget of 2022-23, will shape a very different approach to the Indian Economy and would be completely different from the paper-money/digital currency that we are used to date.
A Digital Rupee is a type of advanced digital currency (blockchain-based); used to represent INR and get issued by the RBI's monetary system. It will help people make faster payments and provide enhanced security/privacy (blockchain technology).
The Digital Rupee will have the same value as INR, currently traded in India. However, in the future, it may be backed by gold reserves. There are no definite clarifications about the legal backing of the Digi-Rupee, till now. The government may create legislation regarding it.
Few Major Features of the Digi-Rupee:
1. It will involve blockchain technology.
2. Transactions would be more secure than Online payments.
3. People can easily keep track of their money.
4. Easily get transferred (lowest costs).
5. Smaller payment wait time.
Currently, the government is working on making its blockchain technology, supporting the Digi-Rupee. The currency will be directly issued by the RBI using an indigenous blockchain network. RBI will be the only source distributing the Digi-Rupee, and this will give a much-needed boost to the Indian Economy as it is cheaper and more efficient to manage.
Being a sovereign currency(digital), the government can easily regulate and monitor its use. It will help the government prevent any misuse/scams from happening in the future. As the Digi-Rupee will link to the INR(and supported by gold reserves), we can expect fluctuations in its pricing. However, this is not the same with cryptocurrencies because they allow price swings.
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