Sources: India is piloting ~10 schemes to test whether its CBDC, the e-rupee, can deliver welfare payments more efficiently, as it looks to boost e-rupee usage
In the western Indian village of Phulenagar, Samadhan Sonawane set up a drip irrigation system on his small onion farm using …LinkedIn:Jaspreet KalraLinkedIn:Jaspreet Kalra:The question around CBDCs is often simple: what problem do they solve? — India launched its CBDC pilot in late-2022 but retail uptake has been mellow. …
Context & Ripple Effects
India’s e-rupee has progressed from wholesale and retail pilot plans in 2022 to a retail pilot with more than 5 million users and participation from as many as 16 banks by 2024. The central bank nevertheless said it was not rushing a system-wide rollout.
The new welfare-payment schemes shift the pilot’s emphasis from building the CBDC network to testing a concrete public-payment use case, addressing the reported challenge of comparatively muted retail uptake.
First-order effects
- Welfare recipients and the agencies administering the selected schemes will use the e-rupee in controlled payment flows, giving India direct evidence on whether it improves delivery efficiency.
- The e-rupee pilot gains a targeted route to transaction volume beyond voluntary consumer use; participating banks and payment infrastructure providers must support those program flows.
Second-order effects
- Results from the schemes could determine whether future e-rupee expansion prioritizes government disbursements over broad retail adoption, shaping where participating banks invest in onboarding and operations.
- If the pilots show limited gains versus existing payment arrangements, the case for accelerating wider CBDC rollout weakens; if they show clear operational benefits, other welfare programs become plausible candidates for testing.
Third-order effects
- India is testing whether a CBDC can justify itself as public-payment infrastructure rather than merely another retail payment option—a distinction that may govern its long-term role alongside established digital-payment systems.
- A sustained focus on narrow, measurable use cases would favor phased CBDC deployment through banks and government programs, rather than a near-term universal rollout; the pilots’ outcomes remain decisive.
The trend: CBDC programs are moving from technical and consumer pilots toward targeted government-payment use cases meant to demonstrate a distinct operational advantage.