India Boosts Digital Currency Adoption Through Welfare Programs Ahead of BRICS Summit

India is leveraging its welfare payment system to accelerate the adoption of its central bank-issued digital currency, the e-rupee, as the country prepares to highlight its progress 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 e-rupee. This effort aims to minimize corruption and reduce leakage in subsidy programs, while also providing a clearer use case for the digital currency following a relatively slow rollout. In one such pilot in Maharashtra's Phulenagar village, farmers are receiving subsidies that cover up to 80% of their drip-irrigation costs, which can only be used at approved vendors. Another pilot in Gujarat aims to bring all 7.5 million households eligible for subsidized food on board by June, effectively utilizing targeted transfers to drive adoption. This push highlights the core challenge faced by central bank digital currencies worldwide: driving usage. The e-rupee has grown to approximately 10 million users from around 7 million earlier in the year, but the total transactions since its introduction in December 2022 amount to just $3.6 billion, a figure that pales in comparison to India's Unified Payments Interface, which processes around $300 billion each month. Early attempts to boost adoption have sometimes been artificially engineered. It was reported in 2024 that several major banks, including HDFC, Kotak Mahindra, and Axis Bank, credited employee salaries into e-rupee wallets to help the system reach 1 million daily transactions in December 2023, a milestone that was not sustained. As India experiments domestically with its digital currency, policymakers are also considering a broader geopolitical role for the technology. The Reserve Bank of India has urged the government to advance a proposal for linking digital currencies across the economies of Brazil, Russia, India, China, and South Africa at the bloc's 2026 summit, with the goal of streamlining cross-border trade and reducing dependence on the US dollar. However, this ambition carries significant political risk, as President Donald Trump has threatened tariffs on BRICS countries that pursue alternatives to the dollar and has already imposed duties on Indian imports tied to its purchases of Russian crude, thereby raising the stakes for any coordinated monetary effort.