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

India is leveraging its welfare payment system to promote the use of its central bank digital currency, the e-rupee, as the country prepares for the upcoming BRICS nations summit. The Reserve Bank of India has launched approximately 10 pilot programs, which channel a portion of the country's $80 billion welfare system through the digital currency. This effort seeks to minimize corruption and leakage in subsidy programs, while providing a clearer use case for the e-rupee following a slow rollout. In one such pilot, farmers in Maharashtra's Phulenagar village are receiving subsidies to cover up to 80% of their 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 drive adoption. The push highlights the global challenge of increasing usage of central bank digital currencies. Despite growing to 10 million users from 7 million earlier this year, the e-rupee has only facilitated $3.6 billion in cumulative transactions since its introduction in December 2022, a relatively small amount compared to India's Unified Payments Interface, which processes around $300 billion per month. Early adoption efforts have sometimes been artificially inflated, with some major banks crediting employee salaries into CBDC wallets to boost transaction numbers. As India experiments with its digital currency domestically, policymakers are also exploring its potential role in the global economy. The Reserve Bank of India has proposed linking the e-rupee with the digital currencies of other BRICS nations, including Brazil, Russia, China, and South Africa, at the 2026 summit, aiming to simplify cross-border trade and reduce dependence on the US dollar. However, this ambition carries significant political risks, particularly given the potential for trade tensions with the US.