The Reserve Bank of India has urged state governments to use programmable central bank digital currency for direct benefit transfers, placing the digital rupee within its discussion of how states manage public spending. The call came at the 36th Conference of State Finance Secretaries in Mumbai on October 27, according to the central bank's release.
Finance secretaries from 27 states and three Union Territories attended. The governor also urged states to join the Unified Lending Interface.
The conference focused on expenditure quality, cash management and prudent debt management. RBI's account records an appeal to use programmable currency, not a compulsory rollout order. It does not specify a deadline, name a new state adopting the system or change the eligibility rules of any welfare scheme.
What programmable welfare payments mean
RBI's digital-rupee FAQ, updated on October 1, explains that programmability allows a government, corporate sponsor or user to limit funds to a specified purpose. Conditions can refer to an expiry date, geographical location, merchant category or merchant payment address. The wallet application displays the applicable conditions to the recipient.
The same FAQ distinguishes the digital rupee from UPI: the former is currency held in a wallet, while the latter is a payment mechanism. The digital rupee is an RBI liability and legal tender. Programmable wallets add conditions to how those rupees can be used, rather than creating an investment product.
Access arrangements also matter for welfare transfers. RBI says ordinary wallet onboarding is linked to savings accounts, but eligible beneficiaries under programmable DBT use cases can be onboarded through mobile or Aadhaar-number authentication without a mandatory savings account. That is a specified use-case arrangement, not a statement that every wallet follows identical onboarding rules. RBI also describes the overall digital-rupee pilots as controlled, limited-scale rollouts intended to test their technology, features and acceptance. Different offline solutions remain under exploration for limited-connectivity locations.
Food subsidies provide an existing example
An earlier government rollout shows the type of payment the October appeal concerns. In its August 14 announcement, the Department of Food and Public Distribution said CBDC-based DBT under the Pradhan Mantri Garib Kalyan Anna Yojana had launched in Chandigarh and Dadra & Nagar Haveli. These are earlier deployments, not new launches announced at RBI's conference.
Under the model described in that release, food subsidy goes into a beneficiary's digital-rupee wallet instead of a conventional bank account. The purpose-bound funds can be spent on foodgrains with empanelled merchants. The department described digital transaction records and reduced cash handling as features of the arrangement.
The August release also specified different access routes: smartphone users could pay through QR codes, while feature-phone users could use an OTP-based mechanism. It identified preceding pilots in Gujarat on February 15 and Puducherry on February 26. Those dates trace the programme's development; they do not establish that every state now offers the facility. The department presents preventing diversion and improving monitoring as objectives of the system, not as independently measured results from the new rollout.
Access and safeguards remain design questions
Separate analysis hosted by the National Institute of Communication Finance examines the practical constraints. In the July to December 2025 issue of its Journal of Communications Finance, Abhijay Pagare discussed how programmable rupees might connect with the Public Financial Management System. His paper is analysis, not a government rollout directive.
Pagare identifies smartphone access, network coverage and privacy as concerns, alongside the difficulty of linking public-finance systems, banks and state administrations. He argues for gradual pilots and alternative access channels, with bank-transfer options retained during integration. These are recommendations in the paper, not safeguards confirmed as adopted by every participating government.
His analysis also raises a question about emergency spending: restrictions meant to protect a subsidy's purpose can reduce a household's flexibility when circumstances change. The paper argues that privacy requires limits on access to spending information. It treats those choices as unresolved design questions, rather than assuming that transaction traceability alone settles the public-policy case.
The conference release does not announce a new beneficiary application process or a compulsory nationwide shift to programmable welfare payments.
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