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

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 highlight its progress at the upcoming BRICS nations summit. The Reserve Bank of India has initiated approximately 10 pilot programs, which channel a portion of the country's $80 billion welfare system through the e-rupee. This effort aims to minimize corruption and reduce inefficiencies in subsidy programs, while providing a clearer use case for the digital currency following a slow initial 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, effectively utilizing targeted transfers to drive adoption. This push highlights the core challenge faced by central bank digital currencies globally: driving usage. Although the e-rupee has grown to about 10 million users from 7 million earlier this year, cumulative transactions since its introduction in December 2022 total a modest $3.6 billion, which pales in comparison to India's Unified Payments Interface, processing 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 e-rupee wallets to help the system surpass 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 central bank 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. President Donald Trump has threatened tariffs on BRICS countries pursuing alternatives to the dollar and has already imposed duties on Indian imports tied in part to its purchases of Russian crude, raising the stakes for any coordinated monetary effort.