budget is also expected to announce incentives and financial support for banks to strengthen the twotier distribution system to deploy and operate digital rupee wallets the union government can earmark a portion of payment infrastructure development fund exclusively for driving the public infrastructure for digital rupee the key focus here can be to enable offline channels of the banks such as branches business correspondents atms and digital banking units for payments and receipts of digital rupee alongside cashalso read union budget 2023 5 ways to make digital rupee a successgovernment can also consider augmenting the distribution by enabling other intermediaries such as prepaid wallet operators rural fintechs and nbfcs to act as intermediaries for wallets after all distribution system adopted for upi has proven that enabling third party psps to build merchant centric and user centric applications and solutions ensured that the users were incentivized to use the system for convenience as well as cashbacks government can also create of a regulatory sandbox for furthering the innovations in digital rupee especially in offline payments secure wallets solutions interoperability and smart contractsbuilding trust and confidence in the new system is very important in driving adoption government may allocate funds towards conducting awareness campaigns and capacity building to increase penetration of digital rupee in areas where cash is still prevalent for eg digital rupee will be beneficial for nonbanking financial companies as they can reduce the physical cash they hold in branches for cash disbursements0130budget 2023 govt can focus on capex fiscal deficit togetherit will be beneficial to increase the disbursement limits for digital rupee so that customers and institutions prefer digital rupee the awareness campaigns also need to educate the customers on possible frauds that may arise from the usage of new payment system as public trust is important for any payment system a robust risk management framework early on is necessary for mass adoption government will also need to ensure that the new system does not support the shadow economy and illegal transactions by having clear checks and balanceswhile it is too early to predict the success of digital rupee it is imperative to nurture and nourish the new system while there are several factors that helped adoption of upi four main factors that made the difference were the zero charges mobile number linkage interoperability and strong distribution while the first two factorszero charges and mobile number linkage that helped the adoption of upi seems to be built into the design of digital rupee government and the regulator need to focus on the last two factors interoperability and distribution to drive adoption of the new system given the experience of already building a payment juggernaut we can certainly look forward to the government bringing a very wellorchestrated framework for advancing digital rupee for now all eyes are on the pilot studies and the union budget to understand the future course of the new payment systemjaikrishnan g is partner and head financial services consulting at grant thornton bharat llp