India is turning to welfare payments to drive adoption of its central bank digital currency as it prepares to put a CBDC in the spotlight at the BRICS summit later this year.
The Reserve Bank of India is implementing about 10 pilot projects in which parts of the country’s roughly $80 billion welfare system will be circulated through the electronic rupee, Reuters reported on Thursday. This work aims to reduce leakage and corruption in the subsidy program while providing clearer use cases for CBDC after a slow rollout.
In Phulenagar village in Maharashtra, farmers are receiving programmable subsidies covering up to 80% of the cost of drip irrigation, which can be consumed only at approved suppliers. A separate pilot program in Gujarat will benefit all 7.5 million households eligible for food subsidies by June, effectively using targeted transfers to expand uptake.
This push highlights a core challenge facing CBDC globally: usage. The number of e-rupee users has grown to about 10 million from about 7 million earlier this year, but cumulative transactions since its launch in December 2022 have totaled just $3.6 billion. This number is still small compared to India’s Unified Payments Interface, which processes around $300 billion per month.
Early adoption efforts are sometimes orchestrated. CoinDesk reported in 2024 that several major banks, including HDFC, Kotak Mahindra and Axis Bank, credited employee salaries to CBDC wallets, helping the system surpass 1 million daily transactions in December 2023, but this milestone did not last.
The domestic experiment in India comes as policymakers consider a larger geopolitical role for the technology. The Reserve Bank of India has urged the government to come up with a proposal to connect CBDCs between the economies of Brazil, Russia, India, China and South Africa at the 2026 ASEAN Summit, aiming to ease cross-border trade and reduce dependence on the US dollar.
Such ambitions carry political risks. U.S. President Donald Trump has threatened to impose tariffs on BRICS nations seeking alternatives to the U.S. dollar and has already imposed tariffs on Indian imports in part related to India’s purchases of Russian crude, raising the stakes for any coordinated currency efforts.
Update (April 24, 90:27 UTC): Rewrite title to explain CBDC abbreviation.