India Launches Digital Rupee Food Subsidy Pilot in Puducherry for Transparency

The Centre is launching a pilot project to distribute food subsidies using the digital rupee (CBDC) in Puducherry under the Pradhan Mantri Garib Kalyan Anna Yojana. The initiative aims to create a secure, traceable, and programmable digital cash mechanism for beneficiaries, ensuring subsidies are used exclusively for purchasing food grains. The pilot will be inaugurated by Union Minister Pralhad Joshi and marks a significant reform in the Public Distribution System. Following Puducherry, the project is planned for phased expansion to other Union Territories.

Key Points: Digital Rupee Food Subsidy Pilot Launched in Puducherry

  • Digital rupee for food subsidies
  • Pilot under PM Garib Kalyan Anna Yojana
  • Programmable tokens for specific use
  • Aims for transparency & efficiency
  • To be expanded to other UTs
2 min read

Centre launching digital rupee-based food subsidy pilot project in Puducherry

India launches a CBDC-based food subsidy pilot in Puducherry under PMGKAY, aiming for transparent, programmable, and efficient DBT delivery.

"enhancing transparency in subsidy delivery - official statement"

New Delhi, Feb 25

The Centre will launch a Central Bank Digital Currency-based food subsidy distribution pilot project under the Pradhan Mantri Garib Kalyan Anna Yojana 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.

- IANS

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Reader Comments

R
Rohit P
Good initiative, but the real test will be on the ground. My aunt in a village still struggles with Aadhaar-based authentication at the ration shop due to poor network. Will these CBDC wallets work offline? The tech needs to be robust for the poorest beneficiaries.
A
Aman W
India's digital public infrastructure is truly becoming a global model. From UPI to ONDC and now programmable digital rupee for subsidies. This can be a game-changer for transparency. Kudos to the teams involved!
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Sarah B
As someone working in fintech, the 'programmable' aspect is key. It ensures the subsidy is used only for intended goods, preventing diversion. However, user education in local languages is crucial for adoption. Hope they have a strong awareness campaign in Puducherry.
K
Karthik V
Pilot in Puducherry makes sense - smaller UT to test the system. But they must ensure the authorised merchants and fair price shops are fully equipped and trained. The last-mile connectivity is where most govt schemes face challenges.
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Nisha Z
While the intent is good, I'm concerned about data privacy and exclusion. What if someone's phone breaks or gets stolen? There must be a simple, immediate grievance redressal mechanism. We cannot let technology become a barrier to food security.

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