India Expands Digital Currency Adoption Through Welfare Programs as BRICS Summit Approaches

India is leveraging its welfare payment system to boost the adoption of its digital currency, as the country prepares to showcase the technology at an upcoming BRICS nations summit. The Reserve Bank of India has initiated around 10 pilot programs, which channel a portion of the country's $80 billion welfare system through the digital currency. This effort aims to minimize corruption and leakage in subsidy programs, while providing a clearer use case for the digital currency following a slow rollout. In one such pilot, farmers in Maharashtra's Phulenagar village 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 on board by June, using targeted transfers to drive adoption. This push highlights the core challenge of usage that digital currencies face globally. Despite growing to around 10 million users from 7 million earlier this year, the digital currency has only facilitated $3.6 billion in cumulative transactions 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 digital currency 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 considering a larger role for the technology in geopolitics. 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. The goal is to streamline cross-border trade and reduce reliance on the US dollar. However, this ambition carries significant political risk, 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.