Union Home Minister and Minister of Cooperation Amit Shah launched a Central Bank Digital Currency (CBDC)-based Public Distribution System (PDS) in Gandhinagar, marking a major reform in India’s food security mechanism. The initiative integrates Digital India with ration distribution, ensuring that affordable food grains reach the poor through a transparent and secure digital framework. The move aligns with Prime Minister Narendra Modi’s governance vision of ‘Minimum Government, Maximum Governance’.
What Is CBDC-Based PDS and Why It Matters?
- The CBDC-based PDS is a technology-driven ration distribution system that uses Central Bank Digital Currency for secure transactions.
- It aims to eliminate leakages, middlemen, and corruption in the Public Distribution System.
- According to Amit Shah, the scheme reflects Prime Minister Modi’s commitment to ensuring the first right over the nation’s resources for the poor, Dalits, backward classes, and tribal communities.
- By digitizing food grain distribution, the government seeks to make food security transparent, accountable, and citizen-centric.
Key Features of the Digital Public Distribution System
The CBDC-based PDS introduces several innovative features,
- Use of Central Bank Digital Currency (CBDC) for secure transactions
- Integration with Digital India infrastructure
- Direct distribution of 5 kg free food grains per person
- Elimination of fraud and duplication
- Nationwide expansion planned within 3-4 years
An important addition is the ‘Annapurna’ machine, capable of dispensing 25 kg of food grains in just 35 seconds, ensuring accuracy and quality control.
Role of DBT and Digital India
- Amit Shah highlighted that earlier, nearly 60 crore people did not have bank accounts.
- Under the Digital India initiative, financial inclusion expanded dramatically, enabling Direct Benefit Transfer (DBT) to curb corruption.
- India now accounts for nearly half of the world’s digital transactions.
- The CBDC-based PDS builds upon this digital foundation, bringing similar transparency to food grain distribution.
- The integration ensures that ration beneficiaries receive their entitlements directly without intermediaries.
Strengthening Food Security for 80 Crore Citizens
- The government currently provides 5 kg of free food grains per person per month to nearly 80 crore people.
- The new CBDC-based PDS ensures that this large-scale welfare measure is implemented efficiently.
- Amit Shah stated that connectivity has reached over 1.07 lakh villages, enabling digital ration delivery even in remote areas.
- The reform ensures better quantity control, quality standards, and real-time tracking of distribution.
About CBDC
- Definition: CBDC is digital legal tender issued by a central bank, recorded as a liability on its balance sheet (RBI).
- Wholesale CBDC: Used by banks and licensed financial institutions for interbank payments and securities transactions.
- Retail CBDC: Accessible to the general public via digital wallets or smartphone apps.
- Token-based Retail CBDC: Allows anonymous transactions using private and public key authentication.
- Account-based RetailCBDC: Requires digital identification for access; example includes DCash in the Eastern Caribbean.
Evolution of the Public Distribution System
- India’s Public Distribution System (PDS) was introduced to ensure food security for vulnerable populations.
- Over time, digitization, Aadhaar linking, and DBT improved efficiency.
- However, leakages and duplication remained concerns in certain regions.
- The introduction of CBDC into PDS marks a new technological phase in welfare delivery.
- By combining digital currency with ration distribution, the government aims to create a transparent, corruption-free, and scalable food security ecosystem across India.
Question
Q. The CBDC-based Public Distribution System was launched in which city?
A) Ahmedabad
B) Gandhinagar
C) Surat
D) Vadodara