Key Points
- Chandigarh and Dadra & Nagar Haveli become first UTs to fully adopt CBDC for food subsidies
- PMGKAY beneficiaries will receive Digital Rupee tokens directly in CBDC wallets from 14 August
- Rollout follows pilot implementations in Puducherry and Gujarat
The Centre will launch Digital Rupee-based food subsidy transfers under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in Chandigarh and Dadra & Nagar Haveli on 14 August 2026, making these the first Union Territories to fully adopt the central bank digital currency for welfare payments.
Under the new system, eligible PMGKAY beneficiaries will receive their food subsidies directly as programmable digital tokens, a form of digital currency issued by the Reserve Bank of India that can be restricted to specific uses, into their CBDC wallets.
The subsidy can then be used only to purchase foodgrains from empanelled merchants, creating an auditable trail of every transaction.
The rollout follows earlier pilot implementations in Puducherry and Gujarat. Unlike those limited trials, the new launch aims to cover all eligible beneficiaries across both territories, according to a government statement.
Pralhad Joshi, Union minister for Consumer Affairs, Food and Public Distribution, will attend the launch along with Gulab Chand Kataria, Governor of Punjab and Administrator of UT Chandigarh, Shivraj Singh Chouhan, Union minister for Agriculture and Farmers Welfare, and Nimuben Jayantibhai Bambhaniya, minister of state for Consumer Affairs, Food and Public Distribution.
Traceability and leakage
The shift from conventional bank transfers to CBDC-based payments addresses a longstanding concern in welfare delivery: the diversion of subsidies before they reach intended recipients. With CBDC, every transfer from government to beneficiary to merchant is recorded on a digital ledger maintained by the RBI, making it difficult to siphon funds without detection.
The programmable nature of the tokens adds another layer of control. Unlike cash or bank transfers that can be spent on anything, these tokens are coded to work only at registered fair price shops and ration dealers. If a beneficiary attempts to use the subsidy elsewhere, the transaction will not process.
For beneficiaries without bank accounts or those in remote areas with limited banking infrastructure, the wallet-based system offers a simpler alternative to traditional account-based transfers. A basic mobile phone with internet connectivity is sufficient to receive and spend the subsidy.
The government has positioned the rollout as a proof of concept for wider adoption. If the implementation in Chandigarh and Dadra & Nagar Haveli demonstrates measurable reductions in leakage and faster disbursement, other states and Union Territories may follow with similar CBDC integrations for their welfare schemes.
The move aligns with the Centre’s broader push to expand Digital Public Infrastructure, the network of government-backed digital systems that includes UPI, Aadhaar and DigiLocker. CBDC represents the next layer in this stack, bringing the central bank’s currency directly into digital transactions without requiring commercial bank intermediaries.
The government has not disclosed the number of beneficiaries covered in the two Union Territories or the total subsidy amount that will flow through the CBDC system.
Your Questions, Answered
What is CBDC-based Direct Benefit Transfer?
CBDC-based DBT uses Digital Rupee tokens issued by the Reserve Bank of India to transfer welfare subsidies directly to beneficiaries' digital wallets, replacing conventional bank account transfers with programmable currency that can only be spent at authorised merchants.
Which areas will receive CBDC food subsidies first?
Chandigarh and Dadra & Nagar Haveli will be the first Union Territories to implement full CBDC coverage for PMGKAY beneficiaries, with the launch scheduled for 14 August 2026.
How does CBDC reduce subsidy leakage?
Every CBDC transaction is recorded on a digital ledger maintained by the RBI, creating an auditable trail. The tokens are programmable, meaning they can only be used at registered fair price shops, preventing diversion to unauthorised purposes.
Were there earlier CBDC pilots for welfare schemes?
Yes, the government conducted pilot implementations in Puducherry and Gujarat before this rollout. The new launch in Chandigarh and Dadra & Nagar Haveli aims to cover all eligible beneficiaries rather than a limited trial group.
