India’s Digital Rupee: A slow dance toward the future

Three years ago, India decided to launch a digital currency. China had one, Europe was working on one, and the world’s largest democracy wanted in. So in December 2022, India got the e-Rupee.

The Reserve Bank of India's latest annual report shows what happened next. The e-Rupee grew from Rs 234.04 crore in circulation to Rs 1,016.46 crore this year. That's an over four-fold jump, which sounds impressive until you realise Indians moved Rs 25 lakh crore through UPI in May alone.

The global context matters here. China had been testing its digital yuan since 2020, conducting trials in major cities and even using it during the Beijing Winter Olympics. The European Central Bank was deep into research for a digital euro. The Federal Reserve was studying a digital dollar. Even a smaller economy like the Bahamas had launched its own version. India, having built one of the world’s most successful digital payment systems with Unified Payments Interface (UPI), couldn’t exactly sit this one out.

The e-Rupee is exactly what it sounds like—rupees, but digital. Same denominations as paper money, stored in a phone app instead of your wallet. Finance Minister Nirmala Sitharaman announced it in her 2022 Budget speech, promising a digital currency “using blockchain and other technologies.” The blockchain part is real—the e-Rupee uses distributed ledger technology, though the RBI has been fairly quiet about the exact technical architecture.