Centre Rolls Out Digital Rupee Pilot System in PDS as Part of Further Digitalisation of Food Grain Distribution

Building on its efforts to digitalise the food distribution system, the central government has decided to incorporate CBDC (Central Bank Digital Currency) technology into the Public Distribution System (PDS).

The government is running a pilot project in which digital coupons generated by the Reserve Bank of India (RBI) will be credited into the CBDC wallets of beneficiaries. These coupons will then be used by beneficiaries to claim food grains under the PDS at fair price shops.

This scheme will be implemented under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in Puducherry as a pilot.

The transactions made under the scheme are designed in such a way that they can be traced, processed and secured in real time.

The initiative will replace conventional bank account transfers, which included direct credit of the subsidy into the bank accounts of beneficiaries of the food grain scheme.

The pilot scheme was launched by Union Minister for Consumer Affairs, Food and Public Distribution Pralhad Joshi on February 26 in Puducherry. Lieutenant Governor K Kailashnathan and Chief Minister N. Rangasamy of the Union Territory were also present during the launch ceremony.

The new system aims to ease the operational challenges reported from the ground in relation to biometric authentication and electronic point-of-sale (e-POS) devices. Moreover, it will also improve transparency in subsidy distribution.

It is to be noted that the government has already digitalised the implementation of various schemes. Beneficiaries receive amounts under the schemes through the Direct Benefit Transfer (DBT) system. This has helped the government curb corruption and check leakage of funds earmarked for other purposes.

The government has already implemented the One Nation One Ration Card (ONORC) system, Aadhaar-enabled authentication, and data monitoring tools such as the Rightful Targeting Dashboard.

The Pradhan Mantri Garib Kalyan Anna Yojana is the world’s largest food security programme, benefiting over 80 crore people across the country. The government plans to further expand the CBDC-based coupon system to other Union Territories as well, including Chandigarh and Dadra and Nagar Haveli.