India Promotes Digital Currency Through Welfare Programs as BRICS Plan Takes Form

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 it 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 leakage in subsidy programs while providing a clearer use case for the CBDC after its slow rollout. In Maharashtra's Phulenagar village, farmers are receiving subsidies that cover up to 80% of their 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 on board by June, effectively using targeted transfers to increase adoption. The push highlights the global challenge of driving usage of central bank digital currencies. Despite growing to 10 million users from 7 million earlier in the year, the e-rupee has seen cumulative transactions totaling just $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 surpass 1 million daily transactions in December 2023, a milestone that was not sustained. As India experiments with its digital currency domestically, policymakers are also considering its potential role in the global economy. The Reserve Bank of India has urged the government to advance a proposal for linking CBDCs 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 risks. 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, raising the stakes for any coordinated monetary effort.