Government Launches CBDC-Based Direct Benefit Transfer for PMGKAY
The Government of India has launched a Central Bank Digital Currency (CBDC)-based Direct Benefit Transfer (DBT) system under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in the Union Territories of Chandigarh and Dadra & Nagar Haveli. The initiative was inaugurated by Union Minister Pralhad Joshi, along with Punjab Governor Gulab Chand Kataria and Union Minister Shivraj Singh Chouhan.
This new system represents a significant digital transformation of the world's largest food security program, transferring food subsidy directly into beneficiaries' Digital Rupee wallets instead of conventional bank accounts. The purpose-bound digital subsidy can only be used to purchase foodgrains from empanelled merchants through a secure, traceable digital payment mechanism. The system accommodates both smartphone users through QR code payments and feature-phone users through OTP-based mechanisms.
Key features of the CBDC-based DBT system include instant transfer of food subsidy, purpose-bound use exclusively for foodgrains, digital transaction records for better traceability, reduced dependence on cash withdrawal and handling, greater transparency in subsidy utilization monitoring, and easier digital payments for merchants.
The initiative builds on the government's broader DBT framework which has already generated savings of over ₹4 lakh crore by reducing leakages and ensuring direct transfer to intended beneficiaries. The program also leverages ASHA, an AI solution that makes 20 lakh calls to beneficiaries for feedback on food grain quality and entitlement receipt, with complaints forwarded to States/UTs for resolution.
This rollout follows successful pilots in Gujarat (launched 15 February 2026) and Puducherry (launched 26 February 2026), making Chandigarh and Dadra & Nagar Haveli the first State/Union Territory to operationalize food subsidy transfers to all eligible PMGKAY beneficiaries via programmable CBDC tokens. The initiative builds on India's digital financial inclusion foundation including 59 crore Jan Dhan accounts with deposits exceeding ₹3.10 lakh crore and UPI which processed over 2400 crore transactions worth more than ₹30 lakh crore in July 2026 alone.
The CBDC-based DBT represents the first large-scale application of digital currency in Central Government welfare programmes and serves as a proof-of-concept for nationwide expansion. It integrates with existing technology-led PDS reforms including digitized ration cards, Aadhaar-based verification, ePoS authentication, online supply-chain management, and nationwide portability under One Nation One Ration Card that currently serves over 80 crore beneficiaries.