New Delhi, Feb 25 The Centre will launch a Central Bank Digital Currency (CBDC)-based food subsidy distribution pilot project under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in the Union Territory of Puducherry on Thursday in 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 tokenised 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 offers 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 availing 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.
The initiative marks a significant reform in the delivery of food subsidy 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. The tokens will be redeemable exclusively for the purchase of entitled foodgrains at authorised merchants and fair price shops, thereby ensuring purpose-bound usage of 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.
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