The central government is set to roll out a pilot project of Central Bank Digital Currency (CBDC), also referred to as digital food currency, under the free ration scheme next month. The pilot will be implemented for a limited number of beneficiaries in Chandigarh, Puducherry, and three districts of Gujarat.
Under the initiative, beneficiaries will receive monthly digital food coupons directly into their RBI-enabled digital wallets on their mobile phones. These coupons can be redeemed at ration shops by scanning a QR code, allowing beneficiaries to collect their entitled free food grains without the need for biometric authentication.
The pilot project aims to enhance transparency in the world’s largest food security programme, curb irregularities, and simplify the process for ration card holders. Officials said the initiative will function as a proof-of-concept (PoC) to assess the feasibility, functionality, and practical utility of a digital food currency. To prevent hoarding, a time limit will be fixed for the use of digital coupons.
A soft launch of the system was conducted earlier this month in Ahmedabad with 25 beneficiaries, during which nearly 2,000 transactions were completed, according to a state government official. The full pilot in Gujarat will cover Anand, Sabarmati, and Dahod districts.
In Chandigarh and Puducherry, where the Direct Benefit Transfer (DBT) system for food grains has been in place since 2015, and physical ration distribution does not exist, the government is exploring options to identify outlets that can distribute free grains against digital food currency. The food grains distributed through these outlets will be supplied by the Food Corporation of India (FCI) or state government agencies.
Officials said the digital food currency will ensure that the subsidy is used exclusively for purchasing food grains. The government is also examining alternative solutions to include beneficiaries who use basic or feature phones and are unable to access digital wallets, so that they too can benefit from the new system.