India is leveraging its welfare system to accelerate adoption of the digital rupee, the central bank digital currency (CBDC) issued by the Reserve Bank of India. The country has launched about 10 pilot programs routing funds from its $80 billion welfare system through programmable CBDC wallets. These pilots aim to reduce payment delays, limit corruption, and build trust in the digital currency ahead of cross-border CBDC discussions among BRICS nations.
Farmers and low-income groups are early participants in these trials. In one case, a farmer in Maharashtra used e-rupee funds to install irrigation equipment, with the subsidy covering up to 80% of the cost through a digital wallet. This approach eliminates the need for upfront payments and long waiting periods. Vijay Kolekar said: "The programmable aspect of CBDC ensures funds cannot be misused while also removing upfront payment needs."
The e-rupee's programmable nature allows subsidies to be spent only at approved vendors, making misuse harder and tracking easier. In one district, nearly 1,400 farmers applied for irrigation subsidies through the system. Another pilot in Gujarat targets millions of households for food subsidies, with plans to onboard all eligible families in phases.
India launched the e-rupee in late 2022, but adoption has been gradual. Total transactions stand at about $3.6 billion so far, small compared to UPI, which processes $300 billion monthly. User numbers have reached around 10 million, though regular usage remains limited. Earlier efforts, including salary payments through CBDC wallets, did not sustain high activity levels.
India is also exploring cross-border use with BRICS nations through a plan to link member countries' CBDCs, potentially supporting trade and reducing reliance on the US dollar. An expert noted: "India is looking for a strong use case that can set CBDC apart." The welfare route offers a clear and practical path for expanding CBDC usage.
