New Delhi: India is taking a new step to improve how welfare money reaches its people by using its central bank digital currency, known as the e-rupee. The government hopes this system will reduce leakages, delays and misuse in one of the world’s largest welfare networks.
The pilot programmes are already running in several regions, including villages in Maharashtra. Farmers and other beneficiaries are receiving subsidies directly into digital wallets instead of waiting for reimbursements or dealing with middlemen.
One key feature of the e rupee is that it can be programmed for specific use. This means the money can only be spent on approved items such as seeds, fertilisers or farming equipment. In one case, a farmer was able to install a drip irrigation system using the subsidy received through the digital currency, without needing to arrange money in advance.
Officials believe this system will make welfare delivery more transparent and efficient. By controlling how funds are used, authorities aim to ensure that government support reaches the right people and is spent for the intended purpose.
The initiative is supported by the Reserve Bank of India along with state governments, the World Bank and banks such as Punjab National Bank. Around 10 million users are already part of India’s broader digital currency trials.
India launched the e rupee in 2022, but its use has been limited compared to the country’s popular digital payment system. Policymakers now see welfare payments as a practical way to increase its adoption.
However, experts warn that too many spending restrictions could make the system less attractive for users. People may still prefer more flexible payment options that allow them to use money freely.
India is also working to improve the digital currency by adding features such as offline payments and wider usability. At the same time, authorities continue to be cautious about private cryptocurrencies, favouring a regulated system that can be closely monitored.
If the experiment succeeds, India’s approach could become a model for other countries looking to use digital currencies to strengthen welfare systems and improve public spending.