A fortnight packed with major developments on the economic front, India’s Finance Minister Nirmala Sitharaman and India’s central bank Governor Shaktikanta Das told the media that there is complete harmony between the two government bodies in the cryptocurrency front.

Crypto makes headlines in India

In the 2022-23 budget presentation on Feb. 1, Sitharaman proposed a flat 30% tax on all income from crypto activities. He also announced the introduction of the central bank digital currency (CBDC) from the next fiscal year starting in April 2022.

On February 3, Indian Prime Minister Narendra Modi emphasized that the Indian CBDC could strengthen the digital economy.

Later, during her response to the Feb. 11 discussion, the Indian Finance Minister clarified that bringing crypto transactions into the tax network does not mean that the government has legalized such assets, despite numerous rumors in the community.

“The prohibition or no prohibition will come later when the consultation gives me inputs, but then I would prefer that it not tax and allow the profits to be there. I am going to tax because it is a sovereign right [of the government] to taxes,” he added.

The government and the RBI are on the same page

Both the Indian Finance Minister and the central bank chief stated that internal discussions are taking place on CBDC and cryptocurrencies, and both are aware of each other’s sensitivities on these issues.

“With RBI and Ministry, not only in cryptocurrencies but also in everything else, I think we are working in total harmony, respecting each other’s domain and knowing what we have to do with each other’s priorities and in the interest of the NATION. There is no turfing here,” Sitharaman said at a news conference after the RBI central board meeting.

Speaking of the consultations on CBDC, RBI Governor Das clarified: “Like several other issues, this particular issue is being discussed internally between RBI and the government. Whatever points we have, we discuss them with [the] Government. Beyond that, I think, I would not like to give more details.

Why is today’s meeting important?

After deftly handling the contentious crypto issue through the 2022-23 annual budget, India’s Finance Minister Nirmala Sitharaman appeared publicly for the first time with RBI Governor Shaktikanta Das on Monday.

In addition to reiterating his stance on crypto, what caught everyone’s attention were the yellow roses on the dais, the predominantly yellow sari of the Indian Finance Minister, and the yellow face mask of the RBI Governor. In this part of the world, yellow means union/marriage.

In a deft move, Sitharaman decoupled RBI’s CBDC plans from the general crypto debate in his budget proposals. While he allowed the RBI to go ahead with the launch of CBDC, he did bring crypto activities. This was without explicitly saying whether digital assets like bitcoin or ethereum are legal or not.

Politically, it was seen as a smart move for the government that helped it get out of a tough spot where views for and against crypto had become highly polarized.

For many, it was also a rejection of the RBI governor, who has been highly critical of cryptocurrencies, stating that they can destabilize the economy.

Today, both the Indian FM and the RBI Governor seemed to clear the air by saying that they are working in complete “harmony”.

Featured image courtesy of Times of India

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