The e-rupee is not beating the Unified Payments Interface (UPI) in consumer payments, and it is not close. Reuters reports that India’s retail CBDC pilot has around 10 million users, but transactions have totalled only about $3.6 billion since launch, versus more than $300 billion processed every month on UPI.
Instead, India appears to be finding a more credible use case: welfare.
According to Reuters, around 10 pilots are under way across the country to test whether the e-rupee can make welfare payments more efficient and reduce leakage in a system worth roughly $80 billion. In Maharashtra, a pilot allows farmers to receive subsidies in e-rupees directly into digital wallets, with the funds programmed so they can only be spent at approved vendors on irrigation equipment. In Gujarat, officials are testing the digital rupee for subsidised food distribution, with the aim of eventually covering all 7.5 million eligible families.
That matters because it changes the story.
For most retail CBDCs, the awkward question has always been simple: what is this better at than existing payment systems? In India, the answer is increasingly not convenience, speed or user experience. UPI already has those covered. The answer is programmability, traceability and control in targeted public spending.
That makes the e-rupee less of a consumer payments product and more of a policy instrument.
The Maharashtra pilot is being run jointly by the World Bank, the Reserve Bank of India, the Maharashtra government and Punjab National Bank. Officials involved in the scheme argue that programmable CBDC can reduce misuse, remove the need for farmers to make upfront payments, and improve access for those who might otherwise be denied vendor credit. In other words, this is not digital money as lifestyle upgrade but administrative plumbing.
For policymakers, that is a much stronger argument than vague claims about innovation. Welfare delivery is measurable. Leakage is measurable. Delays are measurable. Governments like that sort of thing almost as much as they like announcing pilots.
But the Indian model also exposes the core tension at the heart of CBDCs.
The same programmability that makes digital rupees attractive to the state can make them less attractive to citizens. Reuters cites MIT Media Lab’s Neha Narula warning that heavily programmed money — restricted by where, when and for what purpose it can be spent — could deter adoption and undermine the idea that CBDCs are cash-like. That is the real trade-off: efficiency and oversight for the issuer, autonomy and flexibility for the user.
This is why India’s experiment deserves attention beyond its domestic pilots.
What are emerging looks like a two-track strategy. At home, India is testing programmable money for welfare and state-directed transfers. Abroad, it is exploring whether digital rupee infrastructure could support more efficient cross-border settlement.
The Reserve Bank of India has proposed linking BRICS countries’ digital currencies to make cross-border trade finance and tourism payments easier, with the idea potentially going to the 2026 BRICS summit hosted by India. The proposal is aimed at improving payment interoperability and easing settlement friction among members, even as Indian officials maintain that promoting the rupee internationally is not the same thing as openly campaigning for de-dollarisation.
India is also positioned close to the institutional side of multi-CBDC experimentation. The BIS says Project mBridge reached minimum viable product stage in mid-2024 and was built to enable instant cross-border payments and settlement using a shared DLT-based platform. The BIS also lists the Reserve Bank of India as an observing member.
Put those strands together and the strategy starts to look coherent: programmable public money at home, interoperable settlement rails abroad.
That is what makes India’s e-rupee story more interesting than most CBDC coverage. It is not proving that retail CBDCs are better than private-sector payments apps. It is testing whether they are better for government objectives: tighter targeting, cleaner disbursement, more visibility and, potentially, stronger control over how money moves.
That may not be the utopian version of digital currency some early advocates imagined. But it may be the one that gets built.
For the global CBDC market, that is the signal worth watching. India may not be creating the future of everyday payments. It may be creating the first scalable example of CBDC as a state tool, and that, for better or worse, is a much more realistic proposition.
