Introduction of Central Bank Digital Currency (CBDC) in the Public Distribution System (PDS) aims to ensure transparency, efficiency and beneficiary empowerment in India’s food security architecture.
About the Pilot Project
- Programmable Digital Rupee (e₹) is credited directly to beneficiaries’ digital wallets and can be used only for purchasing entitled foodgrains at Fair Price Shops through QR/coupon codes.
- The system enables real-time, secure and traceable transactions, eliminates repeated biometric authentication, reduces leakages, and strengthens last-mile delivery.
What is CBDC?
- It is a digital form of fiat currency issued and regulated by the Central Bank (Reserve Bank of India).
- It is a legal tender and a liability of the central bank, appearing on its balance sheet, as per Section 26 of the RBI Act, 1934.
- Denominated in sovereign currency (₹ in India) and available in the same denominations as physical currency
- It was launched in pilot mode in India since December 2022 [Digital Rupee -Wholesale (e₹-W) and Digital Rupee-Retail (e₹-R)].
Significance of CBDC
- Financial Inclusion: Provides digital payment access to unbanked/underbanked populations; enables direct transfers and welfare delivery through wallets issued by the Reserve Bank of India.
- Transparency & Leak-proof Transactions: Digital ledger creates real-time traceability, helping reduce corruption, tax evasion and subsidy leakages.
- Programmable Payments: Allows conditional transfers (e.g., subsidies usable only for specific purposes), improving efficiency of DBT and monetary policy transmission.
Conclusion
By combining technological efficiency with social equity, programmable digital currency has the potential to deepen financial inclusion, reduce systemic leakages, and set the foundation for a more transparent, accountable, and citizen-centric governance ecosystem.
