India Testing Digital Rupee in Welfare Programs as CBDC Strategy Develops

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India is accelerating the introduction of its central bank digital currency (CBDC), the digital rupee, by embedding it into some of its welfare payment programs as it explores wider use cases of CBDCs.

According to a CoinDesk report, the Reserve Bank of India is running 10 pilot programs that process some of the country’s $80 billion welfare system through India’s digital currency. 

This use of the digital rupee gives the CBDC a real-world use scenario, as the Reserve Bank of India pushes for interoperability between BRICS nations’ digital currencies to facilitate cross-border trade and reduce reliance on the US dollar. 

CBDCs may also help combat known issues in India’s subsidy programs, like inefficiency and corruption.

In the state of Maharashtra, for instance, farmers are receiving funds in digital wallets programmed for acceptance at pre-approved vendors, covering up to 80% of agricultural equipment costs. In Gujarat, authorities aim to onboard all 7.5 million households eligible for subsidized food in the state into a CBDC-backed system by June 2026.

While India released its digital rupee fairly early, in 2022, adoption remains limited to approximately 10 million users out of its population of 1.4 billion people. 

The extreme popularity of the cashless Unified Payments Interface in the country could explain the digital rupee’s limited adoption, which accounts for 84% of digital payments in India.