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APSC Answer Writing (Daily) based on Assam Tribune – 02/09/2025

For APSC CCE and other Assam Competitive examinations aspirants, practicing Daily Answer Writing is vital. This blog covers the most important Main question and its model Answer from the Assam Tribune today (02-09-2025).

Q. Critically examine the role of Central Bank Digital Currency (CBDC) in transforming India’s monetary and financial ecosystem. What challenges does its implementation face?

Introduction

India’s financial landscape is witnessing a digital revolution with the expansion of the Reserve Bank of India’s Central Bank Digital Currency (CBDC) pilot, also known as the Digital Rupee. As a sovereign digital currency, CBDC is expected to complement UPI and digital wallets by offering a safe, legal-tender alternative to cash while modernising monetary operations.

Body

1. Role of CBDC in India’s Financial Ecosystem

Enhancing Financial Inclusion: Enables access to secure digital currency for unbanked and underbanked populations.
Efficiency in Payments: Reduces settlement time and transaction costs in retail and wholesale trade.
Transparency & Security: Minimises risks of counterfeiting, black money, and shadow economy.
Boost to Digital India Vision: Integrates with fintech innovations and strengthens India’s digital public infrastructure.
Global Trade Competitiveness: Potential to support cross-border trade settlement in local currencies, reducing dollar dependence.

2. Challenges of Implementation

Digital Divide: Rural areas still struggle with smartphone and internet penetration.
Cybersecurity Risks: Vulnerability to hacking and fraud undermines public trust.
Interoperability Issues: Need for smooth coexistence with UPI and digital wallets.
Privacy Concerns: Fear of transaction surveillance by the state.
Adoption Resistance: Cash preference continues in many sections of society.

3. Way Forward

Strengthen cybersecurity architecture and regulatory safeguards.
Promote financial literacy campaigns to ensure public trust.
Initiate cross-border pilots with ASEAN, BRICS, and G20 partners.
Ensure privacy-preserving frameworks to balance efficiency with rights.

Conclusion

CBDC has the potential to redefine India’s monetary system by merging the benefits of digital innovation with sovereign credibility. However, its success will depend on addressing technological, social, and regulatory challenges in a phased, inclusive, and secure manner. A carefully managed rollout can make India a global leader in digital currency adoption, complementing its fintech success story.

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