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

India is leveraging its welfare payment system to promote the adoption of its central bank-issued digital currency, with a focus on enhancing its usability ahead of the upcoming BRICS nations summit. The Reserve Bank of India has initiated approximately 10 pilot projects that channel a portion of the country's $80 billion welfare system through the digital rupee. This endeavor aims to minimize corruption and leakage in subsidy programs while providing a clearer use case for the digital currency following its sluggish 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 spent at approved vendors. Another pilot in Gujarat seeks to bring all 7.5 million households eligible for subsidized food on board by June, utilizing targeted transfers to drive adoption. This push highlights the core challenge faced by central bank digital currencies worldwide: driving usage. Although the digital rupee has grown to around 10 million users from 7 million earlier in the year, the total transactions since its introduction in December 2022 amount to merely $3.6 billion, a relatively small figure compared to India's Unified Payments Interface, which processes approximately $300 billion each month. Early efforts to boost adoption 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 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 on the global stage. 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, aiming 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.