Poors may get digital coupons to buy food under PDS:Move to fix drawbacks of current distribution system; govt cancelled nearly 2.50 crore ration cards

The Central Government plans to expand its Central Bank Digital Currency (CBDC)-based food subsidy programme to Chandigarh, Dadra and Nagar Haveli, and Daman and Diu by June, 2026, official sources said to news agency, PTI. Under the scheme, beneficiaries receive their Public Distribution System (PDS) entitlement as a digital token in a wallet issued through the Reserve Bank of India’s (RBI) CBDC framework, instead of collecting physical grain at a ration shop. Once implemented effectively, this initiative could generate subsidy savings of around 4 to 5 per cent, while making delivery more transparent, targeted, and efficient. This could become a revolutionary reform in the way food subsidies are delivered. -Official sources told PTI Govt’s move to fix drawbacks of current system where people collect physical grain at ration shops The move seeks to address a longstanding flaw of the current distribution system, where beneficiaries often face shortages of food grains or receive less than their full entitlement if they arrive at the fair price shop or ration shop late in the month. Section 12 of the National Food Security Act provides for shifting toward more efficient delivery systems, including cash transfer and direct benefit transfer, in recognition of such gaps in the physical distribution system. Cash transfer carries its own risks
However, a plain cash or DBT transfer carries its own risks. If money is transferred directly into a beneficiary’s account without restrictions, it may be spent on non-food items. How will the new token system work? Since, the sovereign digital money is issued and guaranteed by the RBI, it carries the same legal status as regular currency but can be programmed for a specific purpose, which, in this case is the purchase of eligible foodgrains such as wheat and rice.
The token functions somewhat like a digital coupon. The entitlement stays in the beneficiary’s control, can be redeemed at a ration shop or any permitted outlet, and is programmed to reject purchases outside the approved category, sources said. On access, beneficiaries with smartphones can use a digital wallet. While, those with feature phones can receive a redemption code, and those without any device can continue under the existing physical distribution channel, the sources added. The scheme also benefits fair price shop dealers. Under the existing system, dealers are paid later. Under the CBDC model, payment flows automatically into the dealer’s wallet on each transaction, making settlement faster and more transparent, sources said. According to sources, the physical ration distribution channel will continue to remain available alongside the digital system, the sources said. Nearly 2.50 crore ration shops cancelled in 5 years Nearly 2.50 crore ration cards were cancelled across India between 2020 and October 2025, the Union government had informed Parliament on December 10, 2025.