DIGITAL FOOD CURRENCY

NEWS: The Government of India is poised to roll out a pilot initiative for a Central Bank Digital Currency (CBDC), also known as the Digital Food Currency, in February 2026.

ABOUT

• Digital food coupons are a programmable variant of the e-Rupee (CBDC).
• Beneficiaries receive purpose-locked digital tokens instead of physical grains or cash transfers.
• These tokens can be used only at authorised ration shops.
• The initiative acts as a Proof of Concept (PoC) for a future nationwide rollout of digital currency in social welfare schemes.
• Regulatory Body: Reserve Bank of India (RBI).
• Implementing Authority: Ministry of Consumer Affairs, Food and Public Distribution, in coordination with the National Payments Corporation of India (NPCI) and State Governments.

OBJECTIVE

• Real-time tracking of every gram of foodgrain distributed.
• Ensuring that the subsidy is used strictly for foodgrains, preventing the diversion of funds.
• Eliminating the need for repeated biometric authentication at Fair Price Shops, which often fails due to connectivity or physical wear and tear.
• Moving rural beneficiaries toward a digital-first economy through the RBI digital wallet

Features:

• Options are being explored for non-smartphone users to use the currency via SMS-based vouchers or offline digital solutions.
• The grains distributed are supplied directly by the Food Corporation of India (FCI)
• Reduces reliance on e-POS biometric machines, making the process faster for senior citizens and manual laborers.

Significance:

• Reduces the cost and inefficiency of transporting physical cash or food grains by using a digital system.
• Positions India among the first major economies to pilot programmable CBDC for large-scale welfare delivery.
• Ensures food security by restricting usage only for essentials, unlike cash transfers that can be diverted to non-essential spending.