Topic: Effect of Globalization on Indian Society
1. Discuss the various implications of using digital currencies on Indian Society? (250 Words)
Difficulty level: Moderate
Reference: Live Mint
Why the question:
The Reserve Bank of India will start issuing digital currency from 2022-23, a move that will provide an impetus to India’s digital economy. A similar type of question was asked in UPSC Mains this year.
Key Demand of the question:
To explain about CBDC, the technology behind it, its potential benefits and challenges from the societal point of view
Directive:
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.
Structure of the answer:
Introduction:
Start by explaining the emerging concept of central bank digital currency (CBDC)
Body:
In the first part, in brief, write about the technology behind CBDC – Blockchain giving rise to secure digital instruments.
Next, write about potential benefits that society can accrue from CBDC. financial inclusion, the cashless society, decrease the cost of printing, expanding the digital economy and empowering citizens, etc.
Next, write about potential challenges with regard to CBDC. User adoption, security, complexity, domination by Chinese and Opportunity cost due to RBI’s reluctance, etc.
Conclusion:
Conclude with the way forward as to how India should step up to CBDC.
