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

India is leveraging its welfare payment system to accelerate the adoption of its central bank-issued digital currency, the e-rupee, as the country prepares for the upcoming BRICS 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 e-rupee. This effort seeks to minimize corruption and leakage in subsidy programs, while providing a clearer use case for the digital currency following a sluggish rollout. In one such pilot in Maharashtra's Phulenagar village, farmers 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, utilizing targeted transfers to drive adoption. This push highlights the core challenge faced by central bank digital currencies globally: driving usage. The e-rupee has grown to approximately 10 million users from around 7 million earlier this year, but cumulative transactions since its introduction in December 2022 total a modest $3.6 billion, which is 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 CBDC 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 more significant 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, aiming to streamline cross-border trade and reduce reliance on the US dollar. However, this ambition carries political risks, as 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.