The Government of India will launch a Central Bank Digital Currency (CBDC)-based Food Subsidy Distribution Pilot under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in the Union Territory of Puducherry.
The initiative aims to:
- Strengthen India’s Digital Public Infrastructure (DPI)
- Enhance transparency and accountability in subsidy delivery
- Improve efficiency of the Direct Benefit Transfer (DBT) ecosystem
About CBDC (Digital Rupee)
- The Digital Rupee (e-rupee) is a tokenised digital version of the Indian Rupee issued by the Reserve Bank of India (RBI) as a Central Bank Digital Currency (CBDC).
- CBDC provides:
- Secure digital cash
- Instant transactions
- Traceability
- Programmability (purpose-bound usage)
About Pilot
- It integrates CBDC into the DBT framework under the Public Distribution System (PDS).
- Food subsidy will be credited as programmable CBDC tokens.
- Tokens will be directly transferred into beneficiaries’ CBDC wallets.
- Tokens can be redeemed only for purchase of entitled foodgrains.
Redemption allowed at:
- Authorized merchants
- Fair Price Shops (FPS)
- This ensures that subsidy funds are used strictly for foodgrain purchases.
Implementation Mechanism:
- The pilot is being implemented in coordination with
- Government of Puducherry
- Reserve Bank of India
- Public Financial Management System (PFMS)
- Canara Bank (designated banking partner)
- Following the implementation in Puducherry, the CBDC-based pilot will be expanded in a phased manner to cover additional beneficiaries and other Union Territories.