India expands CBDC welfare pilot to cut leaks and corruption: Report

India has widened a digital rupee pilot for welfare payments, bringing CBDC-based direct transfers to two more federally administered territories as the country experiments with using its central bank digital currency beyond conventional payments, according to RT.

The direct-benefit-transfer pilot began Friday in Chandigarh and Dadra and Nagar Haveli, with the goal of sending welfare benefits directly to recipients while reducing reliance on intermediaries.

Authorities are using the digital rupee’s ability to provide traceable and transparent transactions to address longstanding problems with leakages and corruption in welfare distribution.

Recipients receive the digital currency in their wallets and can use it to buy foodgrains from recognized merchants through a secure, real-time digital payment mechanism. Transactions are designed to be secure, traceable and processed in real time, allowing the government to better monitor how benefits are distributed and used.

The program follows an earlier proof-of-concept rollout in Puducherry and Gujarat, expanding the reach of India’s CBDC welfare-payment experiment.

The Reserve Bank of India launched the digital rupee in 2022, including a retail pilot, and has continued testing how CBDC could be used. The government is now testing whether the digital currency can play a larger role in public-benefit distribution.

The latest pilot also comes as India and other BRICS economies explore CBDCs as part of wider cross-border payment initiatives.

The RBI governor said Tuesday that BRICS members are discussing linking their payment systems and CBDCs to reduce transaction costs and improve the speed of international payments.

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