Pralhad Joshi Launches CBDC Pilot for PMGKAY Food Subsidy

In a landmark reform in welfare delivery, the Government of India has launched a Central Bank Digital Currency (CBDC)-based Digital Food Currency pilot under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), integrating the Digital Rupee (e₹) into the Public Distribution System (PDS) framework.

The pilot was inaugurated on February 26, 2026, in Puducherry by Union Minister for Consumer Affairs, Food and Public Distribution Shri Pralhad Joshi, in the presence of Lieutenant Governor Shri K. Kailashnathan and Chief Minister Shri N. Rangasamy, along with senior officials from RBI, Canara Bank and the Union Territory administration.

Programmable Digital Rupee for Food Entitlements

Under the pilot, food subsidies will be credited directly to beneficiaries in the form of programmable CBDC tokens (e₹) generated through the Reserve Bank of India.

These digital coupons will be:

• Deposited directly into beneficiaries' CBDC wallets

• Redeemable exclusively for entitled foodgrains

• Accepted at authorized Fair Price Shops (FPS) and merchant outlets

• Designed to ensure purpose-bound usage of subsidy

The initiative ensures secure, traceable and real-time transactions, eliminating leakages and reducing dependence on intermediaries.

Calling it a "transformative milestone" in India's food security architecture, Shri Pralhad Joshi said integration of CBDC into PDS will enhance transparency, efficiency and beneficiary empowerment, ensuring that over 80 crore beneficiaries under PMGKAY receive their entitlements with clarity and accountability.

He described the reform as aligned with the vision of "Every grain, Every rupee, Every entitlement."

Strengthening the Golden Chain of Digital Reforms

The CBDC pilot builds upon the Jan Dhan–Aadhaar–Mobile (JAM) Trinity, further digitizing India's welfare ecosystem.

The system also addresses operational challenges such as:

• Biometric authentication failures

• e-POS connectivity issues

• Delays in reconciliation

Feature phone users have been specifically accommodated to ensure inclusivity. Beneficiaries can also locate nearby authorized merchant establishments via the digital interface.

PMGKAY: World's Largest Food Security Programme

PMGKAY remains the world's largest food security programme, providing free foodgrains — including wheat, rice and increasingly millets — to eligible households.

Shri Joshi highlighted that international organizations have noted that 25 crore people have been lifted out of multidimensional poverty in the past 11 years, while recent surveys indicate that household expenditure on food has reduced significantly due to free grain distribution.

He added that savings from subsidized food enable families to invest in nutritious commodities such as milk and vegetables, strengthening nutrition security and contributing to a healthier workforce.

AI-Driven Feedback and Transparency

The Minister revealed that the Department makes nearly 20 lakh AI-driven calls every month to beneficiaries to gather feedback on entitlement quantity and quality.

He also confirmed that the CBDC pilot will soon expand to 3–4 States and Union Territories, with a phased rollout planned after outcome assessment.

Secretary, Department of Food & Public Distribution, stated that Puducherry will be followed by Chandigarh and Dadra & Nagar Haveli, with gradual national expansion thereafter.

Ensuring Direct, Purpose-Bound Subsidy

Lieutenant Governor Shri K. Kailashnathan termed the launch a "momentous day" for Puducherry's underprivileged citizens and emphasized that food security delivery must eliminate middlemen and corruption.

Chief Minister Shri N. Rangasamy noted that Puducherry already provides additional foodgrains under its PDS scheme and said CBDC-based DBT would further empower beneficiaries by transferring assistance directly into their digital wallets.

The tokens issued under the pilot can only be used to purchase entitled foodgrains, ensuring purpose-bound subsidy usage and preventing diversion.

Digital Evolution of India's PDS

Over the past decade, the Department of Food & Public Distribution has undertaken major digital reforms, including:

• End-to-end digitization of ration cards

• One Nation One Ration Card (ONORC) portability

• Aadhaar-enabled e-POS authentication

• Real-time transaction capture

• Ann Chakra supply-chain optimization

• Rightful Targeting Dashboard

• Ann Sahayata grievance redressal

The CBDC-based Digital Food Currency marks the next stage in this reform journey, embedding a sovereign, programmable digital payment layer into India's food subsidy framework.

Toward Accountable Welfare Delivery

Officials described the pilot as a transformative step in strengthening last-mile governance, ensuring instant and transparent benefit transfer while reinforcing fiscal discipline.

By integrating the Digital Rupee into PDS operations, the government aims to combine financial inclusion, technological innovation and food security — setting the stage for a new era of digitally empowered welfare delivery.