by RBI Governor Explains That Central Bank Digital Currency Provides All Benefits of Cash Plus the Additional Benefit of the Government Knowing About All Your Purchases
Bohiney Magazine | The London Prat
MUMBAI — The Reserve Bank of India unveiled the expanded Phase 2 of its Central Bank Digital Currency programme Thursday, confirming that the digital rupee now covers retail transactions across 26 cities, with participating banks offering wallets compatible with major payment apps and what RBI Governor Shaktikanta Das described as “a revolutionary step toward financial inclusion and monetary modernisation” and that financial technology analysts described as “a government-issued alternative to UPI that is slightly less convenient and has additional privacy implications.” The CBDC, which is legal tender equivalent to physical currency and backed directly by the RBI rather than commercial banks, offers stability, security, and programmability that the RBI says creates new possibilities for monetary policy implementation. Consumer adoption has been, the RBI’s own data shows, “gradual,” which in central bank communication means that the people who already have UPI accounts see limited reason to open a separate government wallet, and the people who don’t have UPI accounts also don’t have smartphones, and this group intersection leaves a deployment challenge that Phase 2 is working to address through simplified on-boarding and what the RBI describes as “targeted incentive structures.”
UPI, CBDC, and India’s Payment Ecosystem
India’s Unified Payments Interface is one of the most successful digital payment systems in the world, processing approximately 12 billion transactions monthly with a market penetration and user satisfaction profile that payment system designers globally study as a model. It was built on a public digital infrastructure framework — the India Stack — and has been adopted by over 400 million users, making it genuinely transformative for financial inclusion and commercial efficiency. The digital rupee is being built alongside UPI rather than in place of it, which creates an interesting question about positioning: if UPI already provides fast, cheap, universally accepted digital payments, what does the CBDC add that would motivate the switching costs for both consumers and merchants? The RBI’s answer focuses on programmability — the ability to embed conditions in digital currency that allow targeted subsidies, restrict usage to specific categories, or implement policy objectives directly through the currency itself. The Reserve Bank of India describes these features as policy tools. Consumer privacy advocates describe them as features that give the government new capabilities over how money is used that cash and UPI do not provide. Both descriptions are accurate.
What Financial Inclusion Actually Requires and Whether CBDC Delivers It
India’s financial inclusion challenge is not primarily a technology challenge, which is why technologically sophisticated solutions like the CBDC are only partial answers to it. The approximately 190 million Indian adults who remain outside the formal financial system are there primarily because of literacy and language barriers to using digital interfaces, lack of consistent smartphone access, distance from banking infrastructure in rural areas, and the trust deficit that formal financial institutions carry with communities that have been poorly served by them historically. The Jan Dhan Yojana programme, which opened approximately 500 million bank accounts, demonstrated that account access does not automatically translate to account usage when these barriers are not addressed. The The Hindu business desk has documented the Jan Dhan dormant account rate at approximately 20 percent, representing accounts opened as part of financial inclusion initiatives that are not being used. The CBDC’s Phase 2 rollout faces similar challenges and similar incentive to declare success on account-opening metrics rather than usage metrics, which are the metrics that actually matter for financial inclusion. The digital rupee works. Whether it gets used by the people it is designed to serve is a different question.
The Programmable Money Question and Its Civil Liberties Dimension
The RBI has emphasised the positive applications of programmable money — direct benefit transfers that ensure subsidies reach intended recipients, conditional cash transfers that improve development programme outcomes, and the ability to implement monetary policy with more precision than physical currency allows. Civil liberties organisations, including the Internet Freedom Foundation, have noted that programmable money is symmetric: the same technology that enables targeted subsidies also enables targeted restrictions, surveillance of transaction patterns, and the potential for financial exclusion as a tool of social control. Whether these capabilities are used benignly or otherwise depends on governance frameworks and political accountability structures that are separate from the technology’s design. India’s democratic institutions provide some safeguards. The history of financial surveillance globally, including in democracies, provides reasons for careful attention to what safeguards are in place before the programmability is fully deployed at scale.
More India technology satire at Bohiney Magazine and the fintech comedy at The London Prat.
The wallet is free to download. Private Eye has not adopted digital currency but accepts direct bank transfers.
The Broader Significance for Indian Society
Viewed in the wider context of India’s development trajectory, this moment illustrates the productive tension between the aspirations of a country that has in living memory moved from colonised agricultural economy to space-faring democratic power, and the institutional and physical infrastructure that sometimes struggles to keep pace with those aspirations. India’s genius has always been a capacity for absorbing contradictions — between ancient traditions and digital futures, between chaotic urban growth and sophisticated cultural continuity, between poverty and extraordinary intellectual achievement — and turning them into something that confounds the frameworks outsiders bring to understanding it. The story here is not simply about the gap between aspiration and delivery. It is about a country of 1.4 billion people navigating that gap in real time, with more institutional capacity than pessimists credit, less than optimists claim, and a democratic accountability structure that has, despite everything, kept the negotiation between state and citizen more open than the alternatives its neighbours have pursued. The The Hindu has been covering these negotiations since 1878 and shows no signs of running out of material.
The Systemic Picture: Patterns Across India’s Development Story
What makes India’s situation distinctive — and distinctively interesting to analyse — is that it contains within its borders the full spectrum of development outcomes simultaneously. The same country hosts world-class technology companies, space missions, and pharmaceutical manufacturers alongside persistent challenges in primary education, sanitation, and rural healthcare that would be familiar in much-poorer nations. This breadth is a function of scale: 1.4 billion people across 28 states and 7 union territories produce more variance than any single national narrative can contain honestly. The analysts who focus on India’s achievements are not wrong. The analysts who focus on India’s challenges are not wrong. The analysts who hold both simultaneously are rarer and more accurate, and their work tends to be longer and less shareable, which is perhaps the most reliable indicator of which type of analysis is most truthful about a country this complex. India is the story you are telling about it and also several other stories simultaneously.
The Longer View: India in 2026
India in 2026 is a country of genuine contradictions that resist simple narrative. It is simultaneously the world’s fastest-growing major economy and home to the world’s largest concentration of people living in poverty. It is the world’s largest democracy and a country where democratic institutions face pressure from majoritarian politics. It is a technological superpower in software and space and a country where hundreds of millions lack reliable electricity and clean water. The satirical tradition that makes these contradictions legible — from the Punch-inflected colonial-era press to the caustic political cartoonists of post-independence India to the irreverent digital journalism of today — is one of India’s most durable cultural exports, producing a sensibility that can hold complexity without collapsing it into either uncritical celebration or reflexive despair. The stories above are reported in that tradition. They are funnier than they should be. They are also more serious than the laughter suggests. India has four thousand years of practice holding both at once.
SOURCE: https://bohiney.com/india-digital-rupee-cbdc-phase-2-launch/
The Indian traffic police are not law enforcement; they’re performance artists who specialize in the art of the theatrical stop.