Source: Mint
Why in News?
The Union government will launch a Central Bank Digital Currency (CBDC)-based pilot for delivering food subsidies under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in Puducherry from 26 February. This marks a shift toward digital, traceable, and purpose-bound subsidy delivery.
What is the Initiative?
- Subsidies will be delivered using the digital rupee (CBDC) issued by the Reserve Bank of India.
- The pilot aims to make subsidy delivery:
- Better targeted
- Fully traceable
- Purpose-bound (usable only for food purchases)
Objectives of the Pilot
- Reduce leakages in the Public Distribution System (PDS).
- Improve transparency and accountability.
- Ensure benefits are used only for intended purposes.
- Test operational readiness before scaling nationwide.
What is CBDC?
- A Central Bank Digital Currency (CBDC) is the digital form of a country’s sovereign currency, issued and regulated by its central bank.
- In India, the CBDC is the digital rupee, issued by the Reserve Bank of India (RBI).
- It is a legal tender, just like physical cash, but exists in electronic form.
About PMGKAY
- Provides free or subsidised foodgrains under the National Food Security Act.
- Covers over 800 million beneficiaries, making it one of the world’s largest food security programmes.
- Currently operates through:
- Public Distribution System (PDS)
- Direct Benefit Transfer (in select cases)
