India is turning to welfare payments to boost adoption of its central bank digital currency as it prepares to put the CBDC in the spotlight at a summit of BRICS countries later this year.
The Reserve Bank of India is running about 10 pilot programs that route parts of the country’s roughly $80 billion social welfare system through the rupee, Reuters reported on Thursday. The effort aims to reduce leakages and corruption in subsidy programs while giving the CBDC a clearer use case after a slow rollout.
In the village of Phulenagar in Maharashtra, farmers receive programmable subsidies that cover up to 80% of drip irrigation costs, which can only be spent through approved providers. A separate pilot in Gujarat aims to onboard all 7.5 million households eligible for subsidized food by June, effectively using targeted transfers to scale uptake.
The push underscores a central challenge for CBDCs globally: their use. The 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 total just $3.6 billion. That’s still small compared to India’s Unified Payments Interface, which processes around $300 billion each month.
At times, early adoption efforts have been designed. 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 one million daily transactions in December 2023, a milestone that did not persist.
India’s domestic experimentation comes as policymakers consider a broader geopolitical role for technology. The Reserve Bank of India has urged the government to present a proposal to link CBDCs of 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 carries political risks. President Donald Trump has threatened to impose tariffs on BRICS countries seeking 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): Rewrite the title to explain the CBDC acronym.
