India Promotes Digital Rupee Adoption Through Welfare Programs as BRICS Currency Plan Evolves

India is leveraging its welfare payment system to boost the adoption of its central bank-issued digital currency, the e-rupee, as the country prepares to highlight the CBDC at an upcoming BRICS nations summit. The Reserve Bank of India has initiated approximately 10 pilot programs, directing a portion of the country's $80 billion welfare system through the digital rupee. This effort aims to minimize corruption and leakage in subsidy programs while providing a clearer use case for the CBDC following a slow rollout. In Phulenagar village, Maharashtra, farmers are receiving subsidies covering up to 80% of drip-irrigation costs, which can only be spent at approved vendors. A separate pilot in Gujarat aims to onboard all 7.5 million households eligible for subsidized food by June, effectively using targeted transfers to increase adoption. The push highlights the core challenge faced by central bank digital currencies globally: driving usage. Although the e-rupee has grown to about 10 million users from 7 million earlier this year, cumulative transactions since its introduction in December 2022 total only $3.6 billion, a relatively small amount compared to India's Unified Payments Interface, which processes around $300 billion each month. Early adoption efforts have sometimes been artificially inflated. It was reported in 2024 that several major banks, including HDFC, Kotak Mahindra, and Axis Bank, credited employee salaries into CBDC wallets to help the system surpass 1 million daily transactions in December 2023, a milestone that was not sustained. As India experiments with the technology domestically, policymakers are considering a larger geopolitical role for the digital currency. The Reserve Bank of India has urged the government to advance a proposal for linking central bank digital currencies across the economies of Brazil, Russia, India, China, and South Africa at the bloc's 2026 summit, aiming to streamline cross-border trade and reduce reliance on the US dollar. However, this ambition carries political risks, as President Donald Trump has threatened tariffs on BRICS countries pursuing alternatives to the dollar and has already imposed duties on Indian imports tied to its purchases of Russian crude, raising the stakes for any coordinated monetary effort.