cryptocurrency bill: Crypto paper soon; no need to alter growth forecast: Ajay Seth, secretary of economic affairs

Synopsis

Speaking about cryptocurrency, Seth on Monday told reporters, “Our consultation paper is fairly ready. We have gone into a deep dive into this.” He did not mention when it is likely to be put out. Sources, though, told ET that it can be expected in August.

Seth said recent measures taken by the government should cool inflation in the next few months. New Delhi: The Centre is planning a fresh consultation paper on cryptocurrency soon, though a law on the digital assets is likely to take more time, secretary of economic affairs Ajay Seth has said.

On the sidelines of a finance ministry event, the secretary also said there is no case for revising growth estimates downwards. He said inflation should moderate soon and that the government is well-prepared for any shock.

Speaking about cryptocurrency, Seth on Monday told reporters, “Our consultation paper is fairly ready. We have gone into a deep dive into this.” He did not mention when it is likely to be put out. Sources, though, told ET that it can be expected in August.
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The economic affairs secretary said a law on cryptocurrencies may take some more time as India is waiting for an international framework on it and is closely engaging with the International Monetary Fund and the World Bank.

In December last year, during the winter session of Parliament, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, was listed to provide a framework for digital currencies. The bill wasn’t introduced.
graphSubsequently, in the budget for 2022-23, the government imposed a 30% tax on gains made from virtual digital assets, along with a 1% tax deducted at source on all such transactions. However, the Centre clarified that taxation does not mean legal validity for cryptocurrencies. The government has since called for a global framework for taxing virtual digital assets.

The Reserve Bank of India (RBI) has opposed private digital currencies. The latest consultation paper is expected to provide some clarity on the government’s stance and give direction to the industry, which has been seeking clarity on crypto trade.

Growth & Inflation
Seth said recent measures taken by the government should cool inflation in the next few months, adding that it was a dynamic situation and that the Centre could take more measures if required. “Prices of commodities have moderated from their peaks in May, and in the coming months, inflation should (also) be moderating,” he said.

The consumer price index (CPI) surged to an eight-year high of 7.79% in April. RBI raised the repo rate by 0.4 percentage points to 4.4% in a mid-cycle review earlier this month. This was followed by a series of duty cuts in petrol, diesel, edible oil and input materials for industries in an effort to bring down inflation.

Seth maintained there was no reason to revise its growth forecast downward, from the current 7.5%. “No rating agency is talking about a number lower than 7.5%, so there is no need for revision so far,” he said.
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Updated: 05/30/2022 — 22:00