Government Launches CBDC-Based Digital Food Coupon Pilot in Gujarat to Reform PDS

In a significant step toward digitising welfare delivery, the Government of India has launched a Central Bank Digital Currency (CBDC)-based Digital Food Coupon pilot in Gujarat. The initiative was inaugurated by Union Home Minister Amit Shah in the presence of Union Minister for Consumer Affairs, Food and Public Distribution Prahlad Joshi and Gujarat Chief Minister Bhupendra Patel, along with other senior officials.

The pilot marks the integration of CBDC into the Public Distribution System (PDS), which serves over 80 crore beneficiaries across the country. Speaking at the launch, Prahlad Joshi described the reform as a milestone in strengthening transparency, efficiency and beneficiary empowerment within India’s food security architecture. He emphasised that India’s PDS—the largest food distribution network in the world—continues to evolve through technology-driven reforms.

Giving the slogan “Har Dana, Har Rupiya, Har Adhikar,” the Minister said the CBDC-based Digital Food Currency would enhance awareness of entitlements, simplify access to subsidised foodgrains and strengthen accountability in service delivery. Under the new framework, digital coupons generated through the Reserve Bank of India will be credited directly to beneficiaries in the form of programmable Digital Rupee (e₹).

Beneficiaries will be able to redeem their entitled quantity of foodgrains at Fair Price Shops (FPS) using CBDC-based coupon or voucher codes. The system is designed to address operational challenges linked to biometric authentication and electronic point-of-sale (e-POS) devices, while ensuring secure, traceable and real-time transactions.

The pilot has been launched in collaboration with the Reserve Bank of India and the Government of Gujarat, covering select districts including Ahmedabad, Anand, Valsad and Surat. The government has announced plans to expand the initiative to Union Territories such as Chandigarh, Puducherry and Dadra & Nagar Haveli and Daman & Diu in subsequent phases.

Addressing the gathering, Amit Shah said the CBDC pilot represents an important extension of the Digital India vision into the Public Distribution System. He highlighted that nearly half of the world’s digital transactions now take place in India and stated that the introduction of CBDC in PDS would further strengthen transparency, reduce leakages and ensure that beneficiaries receive their entitled foodgrains without hurdles. He also encouraged other States and Union Territories to adopt the system.

Under the CBDC-enabled mechanism, beneficiaries’ digital wallets will carry programmable Digital Rupee, enabling QR code-based or coupon code-based transactions at Fair Price Shops. The system eliminates repeated biometric authentication, improves transaction speed and generates a real-time digital trail. This digital trail is expected to enhance transparency, monitoring and accountability in welfare delivery.

Importantly, Fair Price Shop dealers will receive their margins in real time, ensuring smoother cash flow and building a mutually beneficial ecosystem. Officials stated that the pilot began with a limited number of beneficiaries and will be gradually scaled up based on learnings from the initial phase.

The CBDC-based reform builds upon several digital initiatives undertaken by the Department of Food and Public Distribution in recent years. These include nationwide portability under the One Nation One Ration Card (ONORC) framework, Aadhaar-enabled e-POS authentication, and real-time monitoring systems such as the Rightful Targeting Dashboard. Digital supply chain optimisation through Ann Chakra and grievance redressal platforms like Ann Sahayata have also strengthened transparency and citizen-centric service delivery.

By integrating a programmable sovereign digital payment layer into the PDS architecture, the government aims to further reduce leakages, enhance accountability and empower beneficiaries with greater control over their entitlements.

Officials described the CBDC-based Digital Food Currency pilot as a transformative step toward combining technology with welfare delivery, reinforcing India’s commitment to transparent governance and efficient last-mile service delivery.