India Promotes Digital Rupee Adoption Through Welfare Pilot Programs as BRICS Currency Plan Takes Shape

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 showcase the CBDC at the upcoming BRICS nations summit. The Reserve Bank of India has initiated around 10 pilot programs, channeling 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 one such pilot in Maharashtra's Phulenagar village, farmers are receiving subsidies that cover up to 80% of drip-irrigation costs, which can only be spent at approved vendors. Another pilot in Gujarat aims to bring all 7.5 million households eligible for subsidized food onto the platform by June, effectively using targeted transfers to increase adoption. The push highlights the core challenge of usage faced by central bank digital currencies globally. Despite growing to around 10 million users from 7 million earlier in the year, the e-rupee has only seen cumulative transactions totaling $3.6 billion since its introduction in December 2022. This is relatively small 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 reach 1 million daily transactions in December 2023, a milestone that was not sustained. As India experiments with the technology domestically, policymakers are also exploring its potential for a larger geopolitical role. 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. The goal is to streamline cross-border trade and reduce reliance on the US dollar. However, this ambition carries significant political risk, especially given President Donald Trump's threats of tariffs on BRICS countries pursuing alternatives to the dollar, and the already imposed duties on Indian imports tied to its purchases of Russian crude.