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E-Rupee Welfare Push
India's central bank, the Reserve Bank of India (RBI), is trying to boost the use of its digital currency, the e-rupee. A key strategy is linking the e-rupee to the country's large welfare payment system. The plan is to use programmable subsidies for essentials like food and farming needs, aiming to reduce waste and corruption. This domestic effort to build the e-rupee's practical use happens as India also pushes for global ambitions, particularly linking central bank digital currencies (CBDCs) among BRICS nations.
Struggling for Users Against UPI Giant
Since its launch in December 2022, the e-rupee has struggled to gain widespread adoption. It has reached about 10 million users, but its total transaction value is a modest $3.6 billion. This amount is tiny compared to India's Unified Payments Interface (UPI), a leading real-time payment system that handled over 22.6 billion transactions in March 2026 alone, valued at more than ₹29.6 lakh crore. The new welfare programs, like farmer subsidies in Maharashtra that can only be used at specific stores, and food transfers in Gujarat, are direct attempts to overcome this slow growth. These pilot projects aim to offer real, though limited, uses for the e-rupee. However, earlier efforts to boost numbers, such as banks putting employee salaries into CBDC wallets, show how hard it is to create lasting user engagement. Critics also note that the e-rupee's programmability, which allows for targeted spending, restricts its use more than cash.
India's push for its own digital currency is linked to its global strategy, especially within the BRICS group (Brazil, Russia, India, China, South Africa, and new members like Iran, Egypt, Ethiopia, Indonesia, and the UAE). The RBI has suggested linking BRICS nations' CBDCs to make cross-border trade and travel payments easier, and to decrease reliance on the US dollar. This proposal is expected to be discussed at the 2026 BRICS summit. The goal is technical compatibility between different CBDCs, not a single currency, thus keeping each country's monetary control. However, this ambition faces major pushback. Former U.S. President Donald Trump has warned BRICS countries against challenging the dollar, threatening hefty tariffs. This highlights the strong global influence the U.S. holds through the dollar and its financial systems, like SWIFT, which BRICS nations seek to bypass. Previous efforts to build common CBDC platforms, such as mBridge, have been slowed by the exclusion of sanctioned countries, a risk for BRICS. Whether a BRICS CBDC link succeeds will depend on managing these complex international politics and possible reactions.
Risks and Global Skepticism
India's current approach to e-rupee adoption, relying heavily on welfare payments and programmed spending, has risks. Limiting subsidies to approved vendors could make the digital currency less flexible than cash, potentially leading to user dissatisfaction. This is unlike the freedom of cash or the widespread convenience of UPI, which handles billions of transactions daily without such restrictions. Early pilot programs that boosted transaction numbers through incentives or mandatory salary payments suggest that true user demand might be weak. Globally, CBDCs have generally seen slow adoption due to low awareness, lack of trust, and preference for existing payment methods. India's e-rupee could face similar issues, especially when competing with UPI's strong user base. The BRICS CBDC link plan also carries major geopolitical dangers. The threat of U.S. tariffs and sanctions poses a significant challenge for countries trying to move away from dollar reliance. The US dollar's long-standing global position, established since World War II, is a very tough barrier for any new system. Moreover, creating a single, sanction-proof CBDC network across different countries faces practical difficulties, similar to the limitations seen with mBridge, suggesting the BRICS goal could face major hurdles.
Looking Ahead
The RBI plans to expand e-rupee pilot programs, aiming to improve its connection with systems like UPI and explore new uses, such as international payments. The success of the proposed BRICS CBDC link will largely depend on global political shifts and how member countries handle U.S. economic pressure. Although the RBI describes the BRICS plan as a way to improve efficiency, its core goal of reducing dollar dependence is a clear geopolitical message. How the U.S. reacts will influence future global financial discussions. For the e-rupee itself, its near-term success relies on building real, broad user adoption beyond its current subsidy-focused initiatives.