Centre launches CBDC-based digital food coupon in Gujarat

• The government of India has launched a Central Bank Digital Currency (CBDC)-based Digital Food Currency pilot in Gujarat.

• It was inaugurated by the Union Home Minister Amit Shah in the presence of Union Minister for Consumer Affairs, Food and Public Distribution Pralhad Joshi and Gujarat Chief Minister Bhupendra Patel.

• The initiative has been launched by the government of India in collaboration with the Reserve Bank of India (RBI) and the Gujarat government under the Public Distribution System in Ahmedabad, Anand, Valsad and Surat districts. 

• As part of its scale-up strategy, subsequent phases will extend to the Union Territories of Puducherry, Chandigarh, and Dadra & Nagar Haveli and Daman & Diu.

• India’s PDS — the largest food distribution system in the world serving more than 80 crore beneficiaries — continues to evolve through technology-driven reforms. 

• The introduction of Central Bank Digital Currency (CBDC) in the Public Distribution System (PDS) marks a significant milestone towards ensuring transparency, efficiency and beneficiary empowerment in India’s food security architecture. 

What is digital rupee?

• India’s Central Bank Digital Currency (CBDC) is a digital form of currency notes issued by a central bank. 

Central Bank Digital Currency

• Digital Rupee (e₹), is India’s Central Bank Digital Currency (CBDC). 

• It is the digital form of India’s physical currency, the Rupee (₹). 

• The e₹ is issued by the Reserve Bank of India (RBI) in digital form and e₹ is at par with the physical currency, offering features similar to physical cash like convenience of use, guarantee of RBI, finality of settlement, etc. 

• The e₹ is stored in the user’s digital wallet and can be used to receive or  send money, and  make payment for transactions, just like any physical rupee note.

• The e₹ can be held and transacted through e₹ wallets offered by banks and non-banks for person-to-person payments or person-to-merchant transactions.

• An e₹ wallet is a digital wallet that can be opened on one’s mobile phone/device. 

• The e₹ wallet stores the digital rupee, similar to the physical wallet/purse that stores the physical currency. 

How will the digital food coupon work?

• Under the CBDC-enabled system, digital coupons generated through the Reserve Bank of India will be credited directly to beneficiaries as programmable digital currency (e₹).

• The beneficiaries’ digital wallets will carry programmable digital rupee, enabling seamless QR code-based or coupon code-based transactions at Fair Price Shops for purchase of entitled foodgrains. 

• The system eliminates repeated biometric authentication, improves transaction efficiency, and generates a real-time digital trail, thereby enhancing transparency, monitoring and accountability. 

• Fair Price Shop dealers will also receive their margins on a real-time basis, creating a mutually beneficial ecosystem.

• The initiative will enhance awareness of entitlements, simplify access, and strengthen accountability in delivery of subsidised foodgrains.

(The author is a trainer for Civil Services aspirants.)