India has expanded a pilot scheme that uses Central Bank Digital Currency (CBDC) to transfer welfare payments to two federally administered territories, as it races ahead with testing the digital rupee among a wider audience.

The digital rupee for direct-benefit-transfers initiative was launched in the Union Territories of Chandigarh, and Dadra and Nagar Haveli on Friday. It aims to cut out middlemen from government-run beneficiary schemes, leveraging the digital rupee’s traceability and transparency.

Those receiving the digital money in their wallets can purchase foodgrains from recognized merchants through a secure, traceable, and real-time digital payment mechanism – eliminating the leakages and corruption that have long bedeviled welfare schemes in the country.

The proof-of-concept pilot was earlier rolled out in federally administered Puducherry, and Prime Minister Narendra Modi’s home state of Gujarat.

The Reserve Bank of India (RBI) rolled out the digital rupee in 2022, including a retail pilot.

The RBI governor said on Tuesday that all BRICS nations are discussing linking their payment systems and CBDCs as they explore ways to reduce the costs and increase the speed of cross-border payments.

BRICS members China, India, Russia, and Brazil have already implemented pilot rollouts of CBDCs.