Indian non-for-profit organisation, the National Institute for Smart Government (NISG), has proposed a digital rupee in its draft National Strategy on Blockchain.
A Central Bank Digital Rupee (CBDR) would run on a permissioned blockchain, where Indian government departments run the validator nodes, akin to a private version of Ethereum.
The NISG believes that the Indian government needs to issue a statement of intent on the use of blockchain technology and encourage the sector to strive for further innovation.
Its proposals, it states, would "unlock the value of the data in the hands of citizens," compensating people for sharing personal information relating to finance, telecoms and health.
The CBDR could address the disconnect between India's 1.2 billion mobile connections and only 582 million bank accounts, a void often filled by cryptocurrencies like Bitcoin, which the government may be keen to address.
The Reserve Bank of India (RBI) banned the sale or purchase of cryptocurrency in early 2018, but the Supreme Court is currently listening to further hearings on this.
The RBI confirmed this month that cryptocurrency is not banned in India in response to concerns raised by the country's Internet and Mobile Association.
The ban on crypto extends only to the institutions that fall under the regulatory remit of the RBI, such as banks.
In July 2019, a leaked draft bill suggested that a ban on all use of cryptocurrency in India was being tabled, which the Indian government is still deliberating on.