India is turning to welfare payments to drive adoption of its central bank’s digital currency as it prepares to put the CBDC in the spotlight at a summit of BRICS nations later this year.
The Reserve Bank of India is running about 10 pilot programs that channel parts of the country’s roughly $80 billion welfare system through the e-rupee, Reuters reported on Thursday. The effort aims to reduce leakage and corruption in grant programs while giving CBDC a clearer use case after a slow rollout.
In Maharashtra’s Phulenagar village, farmers receive programmable subsidies covering up to 80% of drip irrigation costs, which can only be used with approved suppliers. A separate pilot project in Gujarat aims to onboard all 7.5 million households eligible for subsidized food by June, effectively using targeted transfers for scale adoption.
The push underscores a core challenge for CBDCs globally: usage. E-rupee has grown to about 10 million users from about 7 million earlier this year, but cumulative transactions since its introduction in December 2022 amount to just $3.6 billion. That remains small compared to India’s Unified Payments Interface, which processes about $300 billion every month.
Early adoption efforts have at times been developed. CoinDesk reported in 2024 that several major banks, including HDFC, Kotak Mahindra and Axis Bank, credited employee salaries into CBDC wallets to help the system surpass 1 million daily transactions by December 2023, a milestone that did not last.
India’s domestic experiments come as policymakers consider a greater geopolitical role for the technology. The Reserve Bank of India has urged the government to promote a proposal to link CBDCs across the economies of Brazil, Russia, India, China and South Africa at the bloc’s 2026 summit, with the aim of streamlining cross-border trade and reducing dependence on the US dollar.
That ambition entails political risk. President Donald Trump has threatened tariffs on BRICS countries pursuing alternatives to the dollar and has already imposed tariffs on Indian imports linked in part to its purchases of Russian crude, raising the stakes for any coordinated monetary effort.
UPDATE (April 24, 90:27 UTC): Rewrites the headline to explain the CBDC acronym.
