From Cash Transfers to Programmable Money: CBDCs and Public Service Delivery in India

Abstract

The emergence of Central Bank Digital Currencies (CBDCs) represents a paradigm shift in monetary innovation, with significant implications for finan- cial inclusion and public service delivery in emerging economies. This paper critically examines the feasibility of integrating CBDCs with India’s e- Governance platforms, focusing on their potential to enhance efficiency, reduce leakage, and improve targeting in subsidy disbursements. Using secondary data from the Reserve Bank of India (RBI), Union Budget 2025–26 allocations, and international case studies (China, Nigeria, Bahamas, and Sweden), the study evaluates both the current status and design considerations of CBDCs in India. A conceptual framework is proposed for CBDC–e-Governance interoperability, distinguishing between retail CBDC applications (e.g., PDS, LPG subsidies) and wholesale CBDC applications (e.g., interest subventions, fertiliser subsi- dies). The findings highlight that while CBDC circulation in India remains neg- ligible (₹1,016 crore retail value vs. ₹36.9 lakh crore notes in circulation as of March 2025), the strategic deployment of programmable CBDCs could gener- ate significant fiscal savings, strengthen accountability, and accelerate digital inclusion. The paper contributes to the literature by linking CBDC design choices to welfare state objectives, identifying institutional and regulatory chal- lenges, and suggesting a phased roadmap for policy implementation.