CBDC Scheme for Food Subsidy Distribution
- Context: India has launched the Central Bank Digital Currency (CBDC) based food subsidy distribution pilot scheme under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) in Puducherry.
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- This marks a significant reform in the delivery of food subsidy through the Public Distribution System (PDS) by integrating digital rupees into the Direct Benefit Transfer (DBT) framework.
- Digital currency or e-cash transaction is a digital mechanism for money transactions. It is implemented by the Reserve Bank of India.
- The CBDC based subsidy will be directly credited to the digital wallets of the beneficiaries in the form of tokens.
- The tokens can be used to purchase food grains at authorized fair price shops.
- The scheme is being implemented in Puducherry in collaboration with the Reserve Bank of India, Public Finance Management System (PFMS), Government of Puducherry and Canara Bank.
Pradhan Mantri Garib Kalyan Anna Yojana
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- In view of the economic disruptions caused by COVID-19, free food grains were provided under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).
- The scheme aims to provide 5 kg of food grains (wheat or rice) free of cost to every person covered under the National Food Security Act, 2013, in addition to the 5 kg of subsidized food grains already provided through the Public Distribution System (PDS).
- It was initially announced for a period of three months (April, May and June 2020). Later, it was extended till September 2022.
- Ministry of Finance is the nodal agency.
