Chandigarh will become the first Union Territory in the country to implement a full-scale Central Bank Digital Currency (CBDC)-based Direct Benefit Transfer (DBT) for food subsidy under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) on August 14, officials said. The launch will be presided over by Punjab governor and Chandigarh administrator Gulab Chand Kataria, with Union ministers attending and participating remotely.
What is changing for beneficiaries
Under the new arrangement, eligible PMGKAY households will receive their food subsidy as a purpose-bound digital rupee token in CBDC wallets instead of the current model of Aadhaar-linked bank transfers. Beneficiaries will be able to visit authorised, empanelled merchants, scan a QR code and complete purchases of entitled foodgrains such as wheat and rice using the digital benefit.
“The initiative marks a shift in welfare delivery from physical distribution of subsidised foodgrains to DBT and now to a purpose-bound digital benefit through CBDC. Chandigarh had pioneered the DBT model for food subsidy in Sept 2015,” said UT chief secretary H Rajesh Prasad.
The CBDC model emphasises programmability, meaning the digital benefit can be restricted for the purchase of specific items, which the administration says will improve transparency, traceability, accountability and efficiency in welfare delivery.
Officials and rollout details
The event on Aug 14 will have a high-level presence: Union agriculture and farmers welfare minister Shivraj Singh Chouhan will be chief guest, while Union consumer affairs, food and public distribution minister Pralhad Joshi is listed as special guest. Minister of State for Consumer Affairs, Food and Public Distribution Nimuben Jayantibhai Bambhaniya and Chandigarh MP Manish Tewari will also attend. From the Centre’s side, the food ministry has framed the move as building on previous pilots.
As part of the launch, the Union minister will also remotely initiate the CBDC-based food subsidy transfers for Dadra and Nagar Haveli from Chandigarh, making the rollouts for the two Union Territories concurrent.
Background and earlier work
Chandigarh began transferring food subsidy directly into Aadhaar-linked bank accounts in September 2015, a system the current CBDC model is intended to build upon. Prior pilots of CBDC for targeted welfare delivery have been run in Gujarat and Puducherry, and Chandigarh participated in earlier exploration of the Digital Rupee as a vehicle for welfare transfers.
| Item | Detail |
|---|---|
| Launch date | August 14 |
| Territories | Chandigarh; Dadra & Nagar Haveli (remote launch) |
| Primary ministers present | Shivraj Singh Chouhan, Pralhad Joshi |
| Key feature | Purpose-bound CBDC tokens redeemable at empanelled merchants |
Why the administration is pushing CBDC for subsidies
Officials frame CBDC-based transfers as a way to reduce leakages and diversion of subsidised rations, and to curtail cash handling in the delivery chain. The programmability of the digital rupee is presented as a technical measure to ensure that the subsidy is used only for the intended purchase, while the real-time, traceable nature of digital tokens is intended to strengthen auditability.
- Beneficiaries will use QR-based payments at authorised merchants to redeem foodgrains.
- The model builds on Chandigarh’s earlier move to Aadhaar-linked DBT (since Sept 2015).
- Gujarat and Puducherry have previously hosted CBDC pilots for targeted welfare delivery.
What to watch for and practical implications
The shift raises practical questions that authorities will need to address operationally: ensuring all eligible beneficiaries have access to CBDC wallets, merchant onboarding across the city and rural peripheries, solutions for users without smartphones, grievance redressal mechanisms and staff training at fair price shops to conduct QR-based redemptions. The administration and food ministry have positioned the Chandigarh rollout as a pilot that could inform scaling to other states and Union Territories.
For beneficiaries, the immediate practical change will be the mode of receiving subsidy — from a bank credit to a CBDC token — and the requirement to transact at authorised merchants using the digital rupee. Officials say the system is meant to be faster and more secure than traditional DBT, though its success will depend on ground-level readiness and inclusive access to digital wallets and point-of-sale mechanisms.
No monetary figures or budgetary allocations were disclosed in the announcement. The Centre and UT administration will be watched closely in the coming days for operational guidelines, lists of empanelled merchants and instructions for beneficiaries on how to access and use CBDC wallets for PMGKAY entitlements.
