New Delhi, February 25 – The Centre will launch a pilot project based on Central Bank Digital Currency (CBDC) for distributing food subsidies under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in the Union Territory of Puducherry on Thursday, marking a major step towards strengthening India’s digital public infrastructure and enhancing transparency in subsidy delivery, according to an official statement.
The digital rupee, or e-rupee, is a tokenized digital version of the Indian rupee, issued by the Reserve Bank of India (RBI) as a Central Bank Digital Currency (CBDC). The introduction of the digital rupee provides an opportunity to enhance the Direct Benefit Transfer (DBT) ecosystem by providing a secure, instant, traceable, and programmable digital cash mechanism for PMGKAY beneficiaries, thereby enabling smoother fund flow and reducing friction in accessing entitlements.
The pilot project will be inaugurated by Union Minister for Consumer Affairs, Food and Public Distribution, Pralhad Joshi, in the presence of Puducherry Lt Governor, K. Kailashnathan, and Chief Minister, N. Rangasamy.
This initiative represents a significant reform in the delivery of food subsidies through the Public Distribution System (PDS) by integrating the digital rupee issued by the RBI into the direct benefit transfer framework. Under the pilot project, the food subsidy will be credited to identified beneficiaries in the form of programmable Central Bank Digital Currency tokens directly into their CBDC wallets. These tokens will be redeemable exclusively for the purchase of entitled foodgrains at authorized merchants and fair price shops, thereby ensuring the purposeful use of the subsidy and enhanced transparency.
Following the implementation in Puducherry, the CBDC-based pilot will be expanded in a phased manner to cover additional beneficiaries and other Union Territories, the statement said.
The pilot is being implemented in coordination with the Puducherry government, the Reserve Bank of India, the Public Financial Management System (PFMS), and the designated banking partner, Canara Bank.
The CBDC-based digital food currency initiative represents the next stage of digital transformation in India’s food security ecosystem. It seeks to enhance transparency, efficiency, accountability, and beneficiary empowerment in subsidy delivery.
