The correct statements about the digital rupee are 1, 2, and 4. The digital rupee is indeed a sovereign currency issued by the RBI, aligning with its monetary policy, thus representing state authority in the digital realm (Statement 1). It is recorded as a liability on the RBI's balance sheet, akin to physical currency (Statement 2). Furthermore, it is designed to be freely convertible against commercial bank money and cash, promoting convenience and liquidity in financial transactions (Statement 4). However, the assertion that it is "insured against inflation by its very design" (Statement 3) is incorrect, as the inherent value of central bank-issued currencies is typically subject to inflationary pressures based on broader economic factors, rather than an intrinsic inflation insurance mechanism.