India is leaning on welfare programs to jump‑start adoption of its central bank digital currency (CBDC), the e‑rupee, while preparing to showcase the technology at the BRICS summit later this year.
What India is doing
- The Reserve Bank of India is running roughly 10 pilot projects that route parts of the country’s roughly $80 billion welfare system through the e‑rupee, Reuters reports. The pilots are meant to cut leakage and corruption in subsidy distribution and give the CBDC a concrete, high‑volume use case after a sluggish rollout.
- Examples: in Phulenagar village, Maharashtra, farmers are receiving programmable subsidies that cover up to 80% of drip‑irrigation costs and can only be spent at approved vendors. In Gujarat, a pilot aims to onboard all 7.5 million households eligible for subsidized food by June, effectively using targeted transfers to scale adoption quickly.
Adoption numbers and the usage problem
- The e‑rupee has grown to about 10 million users from roughly 7 million earlier this year, but cumulative transaction volume since its December 2022 launch is only $3.6 billion—tiny compared with India’s Unified Payments Interface (UPI), which handles about $300 billion each month.
- Early boosts to usage have sometimes been engineered: CoinDesk reported in 2024 that major banks including HDFC, Kotak Mahindra and Axis Bank briefly credited employee salaries into CBDC wallets to help the system surpass 1 million daily transactions in December 2023—a milestone that did not stick.
Geopolitics: BRICS linkage and dollar alternatives
- Domestically driven experimentation is dovetailing with an ambition to give CBDCs a geopolitical role. The RBI has urged the government to advance a proposal to link CBDCs across BRICS economies (Brazil, Russia, India, China and South Africa) at the bloc’s 2026 summit to streamline cross‑border trade and reduce reliance on the U.S. dollar.
- That plan carries political risks. President Donald Trump has threatened tariffs on BRICS countries pursuing alternatives to the dollar and has already imposed duties on some Indian imports, tied in part to India’s purchases of Russian crude—raising the stakes for any coordinated monetary move.
What to watch
- Whether welfare pilots can produce sustained, organic CBDC use beyond one‑off spikes.
- Progress on the BRICS CBDC linkage proposal ahead of the 2026 summit, and diplomatic fallout from efforts to sidestep dollar‑denominated trade.
- Monthly user and transaction metrics for the e‑rupee versus UPI as the clearest signal of whether the CBDC is gaining meaningful traction.
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