India To Pilot CBDC Food Subsidy Distribution In Puducherry

The Government of India launched a Central Bank Digital Currency (CBDC)-based Food Subsidy Distribution Pilot under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in Puducherry on February 26, 2026.

As per the report from the Press Information Bureau (PIB), the pilot was inaugurated by Union Minister for Consumer Affairs, Food and Public Distribution, Pralhad Joshi, in the presence of Lieutenant Governor K. Kailashnathan, Chief Minister N. Rangasamy, and other officials.

It is noteworthy that the digital rupee, or e-rupee, is a tokenised digital version of the Indian rupee issued by the Reserve Bank of India (RBI).

“The introduction of Central Bank Digital Currency (CBDC – Digital Rupee) offers an opportunity to enhance the DBT ecosystem by providing a secure, instant, traceable, and programmable digital cash mechanism for PMGKAY beneficiaries, thereby enabling smoother fund flow and reducing friction in availing entitlements,” the government stated.

Under the pilot, food subsidies will be credited directly to beneficiaries’ CBDC wallets as programmable tokens. These tokens can be used only to purchase entitled food grains at authorised merchants and Fair Price Shops.

The pilot is implemented by the Government of Puducherry, the RBI, the Public Financial Management System (PFMS), and Canara Bank, the designated banking partner.

Officials said the CBDC-based system will improve efficiency, accountability, and transparency in the Public Distribution System.

Earlier trials were conducted in Gujarat, where CBDC-enabled digital ration card payments were tested. MEITY has also used blockchain technology in e-procurement, health records and land registration projects.

These efforts aim to make payments traceable and reduce errors or misuse in government schemes.

Union Minister Pralhad Joshi said the pilot will simplify subsidy delivery and empower beneficiaries. Lt Governor K. Kailashnathan said Puducherry is serving as a testing ground for digital initiatives. CM N. Rangasamy welcomed the project as an improvement in public service efficiency.

After Puducherry, the CBDC-based food subsidy model will expand in phases to include more beneficiaries and Union Territories. The project is part of the government’s efforts to strengthen the Direct Benefit Transfer (DBT) system.

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