The Government of India as a step towards strengthening India’s digital public infrastructure and enhancing transparency in subsidy delivery, has launched the Central Bank Digital Currency (CBDC)-based Food Distribution System. What is Central Bank Digital Currency Digital Rupee or e₹, is India's Central Bank Digital Currency (CBDC). It is the digital form of India's physical currency, the Rupee (₹). 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. e₹ is stored in the user's digital wallet and can be used to receive / send money, and / or make payment for transactions, just like any physical ₹ note. RBI creates e₹ and issues them to banks and non-banks electronically. Banks and non-banks, thereafter, are responsible for facilitating onboarding and opening e₹ wallets for their customers on their mobile phones. To know more, click here. Pilot use cases of CBDC in Public Distribution System The Government of India launched a Central Bank Digital Currency (CBDC)-based Digital Food Currency pilot in Gujarat on February 15, 2026. The initiative has been launched by the Government of India in collaboration with the Reserve Bank of India and the Government of Gujarat under the Public Distribution System in Ahmedabad, Anand, Valsad and Surat districts. Under the CBDC-enabled system, 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. Central Bank Digital Currency (CBDC)-based Food Subsidy Distribution Pilot under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) is being taken in the Union Territory of Puducherry from 26th February 2026. Under the pilot project, food subsidy will be credited to identified beneficiaries in the form of programmable Central Bank Digital Currency (CBDC) tokens directly into their CBDC wallets. The tokens shall be redeemable exclusively for purchase of entitled foodgrains at authorized merchants & Fair Price Shops (FPS), thereby ensuring purpose-bound usage of subsidy and enhanced transparency. The pilot is being implemented in coordination with the Government of Puducherry, the Reserve Bank of India, Public Financial Management System (PFMS), and designated banking partner, Canara Bank. Following the implementation in Puducherry, the CBDC-based pilot will be expanded in a phased manner to cover additional beneficiaries and other Union Territories. Source : PIB