The Centre has successfully launched a Central Bank Digital Currency (CBDC)-based Direct Benefit Transfer (DBT) system for food subsidies under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in Chandigarh and Dadra & Nagar Haveli on August 14, 2026. According to the latest reports, Chandigarh and Dadra & Nagar Haveli are the first Union Territories in the country to achieve complete digital adoption of CBDC-based food subsidy transfers for all eligible PMGKAY beneficiaries. The rollout was attended by Union Consumer Affairs, Food and Public Distribution Minister Pralhad Joshi, Punjab Governor and Chandigarh Administrator Gulab Chand Kataria, and Union Agriculture and Farmers Welfare Minister Shivraj Singh Chouhan, among others. The launch builds on Chandigarh's pioneering role in welfare digitisation, as the UT had pioneered the DBT model for food subsidy in September 2015, transferring subsidies directly into Aadhaar-linked bank accounts of eligible households, as confirmed by UT Chief Secretary H Rajesh Prasad during a press conference.
Under the new CBDC mechanism, eligible PMGKAY beneficiaries will receive their food subsidy directly as programmable Digital Rupee tokens into their CBDC wallets, as reported by the food ministry. The digital tokens are programmed specifically for the purchase of entitled foodgrains such as wheat and rice from authorised merchants, representing a significant advancement from previous DBT models. Beneficiaries will receive the digital subsidy, visit an empanelled merchant, scan a QR code and complete the transaction using the real-time, traceable digital payment system. The ministry stated that this move builds on earlier pilot projects, with the key feature of programmability keeping the digital benefit linked to its intended purpose while improving transparency, traceability, accountability and efficiency across the welfare delivery chain. The digital rupee, or e-rupee, is a tokenised digital version of the Indian rupee, issued by the Reserve Bank of India (RBI) as a Central Bank Digital Currency (CBDC), offering an opportunity to enhance the DBT ecosystem by providing a secure, instant, traceable, and programmable digital cash mechanism for PMGKAY beneficiaries.
The government has positioned this initiative as a way to plug leakages and reduce diversion of subsidies, while cutting down on cash handling in the welfare delivery chain, according to the latest reports. The shift addresses a longstanding concern in welfare delivery: every CBDC transaction is recorded on a digital ledger maintained by the RBI, creating an auditable trail that makes it difficult to siphon funds without detection. The programmable nature of the tokens adds another layer of control, as the tokens are coded to work only at registered fair price shops and ration dealers, preventing diversion to unauthorised purposes. Union Minister Pralhad Joshi assured that there is no question of excluding any eligible beneficiary, stating that this system is "rightful targeting," while wrongful beneficiaries will be automatically deleted. The government expects the shift to enable faster, more secure benefit transfers and encourage wider adoption of wallet-based digital payments among beneficiaries. The rollout is being positioned as a proof of concept for the nation and a scalable template for adoption by other States and Union Territories, with the initiative expected to provide valuable operational experience regarding the integration of CBDC with welfare schemes.
The initiative is expected to feed into the Centre's broader push on Digital Public Infrastructure, as authorities look to test how CBDCs can be integrated into large-scale welfare programmes, as reported by PIB Delhi. The move represents a significant step toward digitising India's public distribution system and could serve as a blueprint for similar implementations across the country's welfare programmes. The programmable nature of the CBDC system specifically addresses the need for welfare-specific digital payments, ensuring that subsidies remain linked to their intended purpose while improving the overall efficiency and transparency of India's welfare delivery mechanisms. The government has not disclosed the number of beneficiaries covered in the two Union Territories or the total subsidy amount that will flow through the CBDC system, but the move aligns with the Centre's broader push to expand Digital Public Infrastructure, the network of government-backed digital systems that includes UPI, Aadhaar and DigiLocker. The rollout is envisaged as a proof of concept for the nation and a scalable template for adoption by other States and Union Territories, with the initiative expected to provide valuable operational experience regarding the integration of CBDC with welfare schemes and support the Government's vision of strengthening Digital Public Infrastructure and delivering citizen-centric services through innovative technologies.
