CBDC-Based Food Subsidy Distribution Pilot under PMGKAY to be Launched in Puducherry

**Executive Summary** The Government of India is launching a Central Bank Digital Currency (CBDC)-based Food Subsidy Distribution Pilot under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in Puducherry. The pilot, which aims to enhance transparency and efficiency in subsidy delivery, will be inaugurated on 26th February 2026 by Union Minister Shri Pralhad Joshi in the presence of other dignitaries. The pilot will be expanded to other Union Territories. **Key Points / Main Content** * **Pilot Overview:** * The CBDC-based pilot aims to strengthen India’s digital public infrastructure and enhance transparency in subsidy delivery. * It involves the distribution of food subsidy in the form of programmable CBDC tokens directly into beneficiaries' CBDC wallets. * **Digital Rupee (e-rupee):** * The digital rupee is a tokenized digital version of the Indian rupee, issued by the Reserve Bank of India (RBI) as a CBDC. * It offers a secure, instant, traceable, and programmable digital cash mechanism, which enables smoother fund flow and reduces friction in availing entitlements for PMGKAY beneficiaries. * **Implementation Details:** * The pilot is being implemented in coordination with the Government of Puducherry, the Reserve Bank of India, Public Financial Management System (PFMS), and Canara Bank. * CBDC tokens are redeemable exclusively for the purchase of entitled foodgrains at authorized merchants & Fair Price Shops (FPS). * **Objectives:** * The initiative seeks to enhance transparency, efficiency, accountability, and beneficiary empowerment in subsidy delivery within India's food security ecosystem. **Impact Analysis** **Beneficiaries of PMGKAY:** * **Impact:** Food subsidy will be received as programmable CBDC tokens directly into their CBDC wallets, improving the efficiency and transparency of the subsidy delivery. * **Action Required:** Must use CBDC wallets to receive and spend food subsidy tokens at authorized merchants & Fair Price Shops (FPS). **Government of Puducherry:** * **Impact:** Involved in the implementation and coordination of the pilot project. * **Action Required:** Collaborate with other stakeholders (RBI, PFMS, Canara Bank) to ensure smooth implementation and execution of the CBDC-based food subsidy distribution. **Reserve Bank of India (RBI):** * **Impact:** Issuing authority of the digital rupee and involved in the overall implementation of the CBDC-based pilot. * **Action Required:** Oversee and support the CBDC pilot implementation, including the issuance and management of digital rupees. **Authorized Merchants & Fair Price Shops (FPS):** * **Impact:** Will accept CBDC tokens as payment for entitled foodgrains, ensuring purpose-bound usage of subsidy. * **Action Required:** Accept CBDC tokens from beneficiaries in exchange for foodgrains.

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