India Launches CBDC-Based Direct Benefit Transfer for Food Subsidies
The Government of India has launched a Central Bank Digital Currency (CBDC)-based Direct Benefit Transfer 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 on August 14, 2026.
This new system represents the first large-scale application of CBDC in Central Government welfare programmes. Instead of conventional bank account transfers, food subsidies are transferred directly into beneficiaries' Digital Rupee wallets as programmable tokens. These purpose-bound digital subsidies can only be used to purchase food grains from empanelled merchants through a secure, traceable digital payment mechanism that supports both smartphone QR code payments and feature-phone OTP-based access.
The system provides instant transfer of food subsidy, digital records for better traceability, reduced dependence on cash handling, greater transparency in subsidy utilization monitoring, and easier digital payments for merchants. The initiative builds on earlier pilots conducted in Gujarat (launched February 15, 2026) and Puducherry (launched February 26, 2026), and aims to ensure no exclusion of eligible beneficiaries while preventing misuse through its programmable nature.
Union Minister Pralhad Joshi highlighted that the DBT framework has already led to savings of over ₹4 lakh crore by reducing leakages and ensuring direct transfer of benefits. He also mentioned 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. The initiative supports over 80 crore beneficiaries through the world's largest food security programme, with more than 25 crore people having moved out of poverty through government efforts.
The programme builds on India's digital financial infrastructure 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 is envisioned as a proof-of-concept for nationwide scalability and represents the next step in technology-led PDS reforms including digitized ration cards, Aadhaar verification, ePoS authentication, and One Nation One Ration Card portability.