E-rupee to cut cost of cross-border remittances to 2-3%, says DEA secy

Central Bank Digital Currency (CBDC) or e-rupee can help halve the cost of cross-border remittances to 2-3 per cent, Economic Affairs Secretary Ajay Seth said on Friday.

Speaking at the Federation of Indian Chambers of Commerce & Industry's (FICCI) annual general meeting, the secretary said that remittances to India are around $100 billion annually and, compared to the global level of 8-9 per cent, the cost in India is at 5 per cent of each transaction value.

"At the moment, cross-border payment is not a very efficient system; it takes time. At the same time, there is a cost factor. For cross-border payments, CBDC can be very effective in bringing down costs further to the range of 2-3 per cent,” Seth said.

CBDC was announced in the Union Budget 2022-23 by Finance Minister Nirmala Sitharaman. The RBI began the pilot wholesale CBDC project on November 1, 2022, while the pilot on the retail version was launched on December 1, 2022. The e-rupee is in the form of a digital token that represents legal tender and is being issued in the same denominations as paper currency and coins.

Speaking at the sidelines, the secretary also said that the upward revision in GDP growth forecast by the RBI is "very well placed," with high-frequency indicators in October and November showing good momentum although the economy still faces stickiness on inflation and supply-side measures will continue to be taken to keep food prices in check.

"Certainly, we agree with the RBI's assessment. It is quite obvious [with] the growth that India has achieved in the first half of the year and the two months of the current quarter. The high-frequency indicators are showing good momentum, so this upward revision is well placed," Seth added.