No move to recognise Bitcoin as a currency: FM

RBI has proposed central bank digital currency: Minister

New Delhi: The government has no proposal to recognise Bitcoin as a currency in the country, Finance Minister Nirmala Sitharaman said in a reply to the Lok Sabha on Monday. She also informed the House that the government does not collect data on Bitcoin transactions.

Whether the government has any proposal to recognise Bitcoin as a currency in the country, the Finance Minister said “No, sir”.

Bitcoin is a digital currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties. It was introduced in 2008 by an unidentified group of programmers as a cryptocurrency as well as an electronic payment system. It is reportedly the first decentralised digital currency where peer-topeer transactions take place without any intermediary.

Meanwhile, the government plans to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 in the ongoing Winter Session of Parliament. The Bill seeks to ban all but a few private cryptocurrencies to promote underlying technologies while allowing an official digital currency by RBI.

In a separate question on whether the government has any proposal to introduce Central Bank Digital Currency (CBDC) in the country, MoS Finance Pankaj Chaudhary said that a proposal from the Reserve Bank of India (RBI) was received in October 2021.

Chaudhary added that the proposal was to amend the Reserve Bank of India Act, 1934 to enhance the scope of the definition of ‘bank note’ to include currency in digital form. “RBI has been examining use cases and working out a phased implementation strategy for the introduction of CBDC with little or no disruption,” MoS said.

“Introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs, reduced settlement risk. Introduction of CBDC would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option,” Chaudhary added, noting that there are also associated risks that need to be carefully evaluated against the potential benefits.

Inflation

On inflation, the Finance Minister said the price situation of major essential commodities is being monitored by the government on a regular basis and corrective actions are taken from time to time.

“The uptrend in inflation has been largely led by exogenous factors viz. increased international prices of crude oil and edible oils which have an impact on domestic inflation due to India’s import dependence on these items,” she said.

The rise of WPI inflation is also mostly driven by ‘fuel and power’ and manufactured products inflation, once again driven by increased global prices of crude oil and increase in international commodity/ input prices, she said.

Several supply side measures have been taken by the government to curb the inflationary pressures, she said.

Fuel prices

To check the petrol and diesel prices, Sitharaman said, the central government has reduced Central Excise Duty on Petrol & Diesel by Rs 5 and Rs 10 respectively with effect from November 4, 2021.

“In response many state governments have also reduced Value Added Tax on petrol and diesel. Consequently, retail prices of petrol and diesel have sobered down,” she said.

As an additional measure to control prices, India has agreed to release 5 million barrels of crude oil from its Strategic Petroleum Reserves, she said, adding, this release will happen in consultation with other major global energy consumers including the US, China and Japan.