India Drives 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 its central bank digital currency at the upcoming BRICS nations summit. The Reserve Bank of India has launched around 10 pilot programs, channeling a portion of the country's $80 billion welfare system through the digital rupee. This effort aims to minimize corruption and leakage in subsidy programs while providing a clearer use case for the digital currency after a relatively 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 increase adoption. The push highlights the challenge of driving usage for central bank digital currencies globally. Despite growing to around 10 million users from 7 million earlier in the year, the digital rupee has only seen cumulative transactions of $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 every 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 reach 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 geopolitics. The Reserve Bank of India has urged the government to propose a plan for linking digital currencies across the economies of Brazil, Russia, India, China, and South Africa at the 2026 summit, with the goal of streamlining cross-border trade and reducing reliance on the US dollar. However, this ambition comes with political risks, as 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.