Internationalizing Rupee – A Dream or Reality
Internationalizing Rupee is about making India Rupee accepted worldwide and an alternative world reserve currency. USD serves as World Reserve Currency, contributing towards more than 50% of the world trade.
De-dollarization
De-dollarization has been in-talks lately due to dominance of USD over global trade, emerging economies concern over possible fear of financial sanctions or restrictions from United States of America and risk related with fluctuation in USD value and US monetary policy.
Emerging Economies are seeking ways to reduce their overreliance on US Dollar, enhancing their economic sovereignty by diversify their currency reserves and using alternate currencies. It will enable countries to develop financial systems, pursue economic policies aligned with their national interests and strengthen their financial objectives.
Government of India is making efforts towards internationalizing rupee through digitalization banking and payment reforms. Government has made significant effort by building strong base towards internationalizing rupee. It made country’s financial system stronger by building capabilities through NPCI – National Payment Corporation of India. NPCI has built UPI-Unified Payment Interface, Rupay Payment System, paying way for rupee internationalization.
NPCI International Payments Limited
NPCI has incorporated a separate subsidiary named NIPL- NPCI International Payments Limited to take its product offering globally. Organizations from nations around Asia, Africa and Middle East offer partnership to improve their payment infrastructure. NIPL is focusing primarily on internationalization of Rupay and UPI.
RBI has partnered with 18 nations: Botswana, Fiji, Germany, Guyana, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Oman, Russia, Seychelles, Singapore, Sri Lanka, Tanzania, Uganda and the United Kingdom. It granted approval to domestic and foreign AD banks for opening Special Vostro Rupee Accounts (SVRA) for settling payments in INR.
NPCI has been partnering with International Banks and Organisations. It is paying way for issuing rupay cards internationally and allowing Indian Rupee as legal tender internationally. It also allows UPI acceptability internationally. NIPL is taking measure to increase partnership across nation for UPI integration and then, leveraging its accessibility towards Rupay.
Will Indian Rupee be Internationalized?
The answer is Yes but It will take time. Before making India Rupee international, Indian Economy has to go towards full transformation. India should introduce more economic reforms by making business incorporation easy, more corporate governance etc. It needs to allow full currency convertibility rather than currency convertibility over capital accounts currently. Other Criteria’s would be gross fiscal deficit less than 3.5% of GDP, inflation between 3% to 5% over three years, effective CRR of 3% and gross NPA of 5% or less pro-founded by various committees in previous years.
All these efforts and discussions are just a stone thrown in ocean, It merely disturbed the pattern. Lets work towards it, making Indian economy stronger by facilitating economic growth. Lets make India a manufacturing hub so that it can pay way for international trade balance. Ultimately, It will create taker for Indian Rupee worldwide whereas there is no or very few takers due to international trade imbalance. For example, Russia has initiated towards using Indian Rupee for international trade. But halted the process as it will end up with annual rupee surplus. It is not desirable due to high trade gap in favour of Russia.
To conclude for now, It is a dream but can become reality if make continuous effort towards it. It will be done by making cautious effort fixing economic gaps.
