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

India is leveraging its welfare payment system to promote the adoption of its digital currency, as the country prepares to showcase its central bank digital currency 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 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 eligible households into the subsidized food program by June, using targeted transfers to drive adoption. The push highlights the core challenge faced by central bank digital currencies globally: increasing usage. Despite growing to 10 million users from 7 million earlier this year, the cumulative transactions since its introduction in December 2022 total only $3.6 billion, a relatively small amount compared to India's Unified Payments Interface, which processes around $300 billion each month. Early adoption efforts have sometimes been artificially inflated, with major banks crediting employee salaries into digital wallets to boost transaction numbers. India's domestic experimentation with digital currency comes as policymakers consider a larger role for the technology in the global economy. The Reserve Bank of India has urged the government to advance a proposal for linking central bank digital currencies across the BRICS economies at the 2026 summit, with the goal of streamlining cross-border trade and reducing reliance on the US dollar. However, this ambition carries significant political risk, as the US has threatened tariffs on BRICS countries pursuing alternatives to the dollar.