Making India’s CBDC Work — for the Indian Society

The debate around Central Bank Digital Currencies (CBDCs) in India often revolves around financial technology and monetary policy. But a CBDC will succeed only when it becomes part of a living economy — a space where people accept and use it meaningfully.

India offers a unique opportunity to design such a space. The government can use CBDC not merely as another form of money, but as a tool to encourage good public habits and strengthen traditional livelihoods.


Incentivising Good Public Habits

A society runs smoother when its citizens follow good civic practices — using public transport, paying taxes on time, and participating in community-minded behaviour. These acts are already digitally recorded in various government systems: metro and bus passes are managed online, and tax payments are logged electronically.

If the government links these verified acts with a CBDC-based reward system, then citizens who show responsible behaviour can automatically receive small amounts of CBDC in their Aadhaar-linked accounts or digital wallets. There would be no need for human intervention; the data already exists.

Imagine this: every time you renew a metro pass or file advance taxes before the due date, a small CBDC token quietly lands in your wallet.


Building an Access-Controlled Economy

Where would this money be spent? Here lies the innovative possibility. The government could direct this CBDC flow into a closed but vibrant marketplace of traditional artisans.

This is not far-fetched. The PM Vishwakarma scheme, for instance, already delivers financial incentives directly to registered artisans through online channels. The same digital pipeline can be extended: artisans enrolled under such schemes can be onboarded into a dedicated CBDC e-marketplace.

Good citizens spend their CBDC with these artisans, while artisans can convert the received CBDC into normal money through their bank accounts. Of course, the government must ensure that only CBDC received in registered enterprises' registered bank-accounts can be converted to normal money. 

This way, the system creates a controlled, transparent, and mutually beneficial economy — one that encourages responsible public behaviour while also giving traditional livelihoods a fresh digital boost.


What Can Be Done Further

The scope of such a system can be expanded carefully. Two possibilities stand out:-

-Good Samaritans at accident sites: Citizens who assist accident victims could be rewarded once their help is verified by emergency services.

-Responsible tourists: Visitors who dispose off waste properly at tourist hubs could also be incentivised through smart bins or other verification mechanisms. 

These proposals are, of course, trickier to implement, because they require on-site verification. But as technology improves, they can be added to the ecosystem. The Uttarakhand government's initiative in this year's Chaar Dhaam Yatra to collect (and recycle) yatris' used water-bottles through digital tracing and monetary rewards, can be a practical case which can be built upon. 



A Win-Win Experiment

Starting with public transport users and timely tax-payers ensures that the system is practical, automated, and minimally prone to misuse. Linking this controlled CBDC economy to registered artisans and SHGs — who already receive benefits online — creates a circular flow of value: responsible citizens get rewarded, artisans get more customers, and society benefits from better habits.

If designed with care, India’s CBDC need not remain a purely financial experiment. It can evolve into a social currency — nudging citizens toward good practices, while sustaining the country’s deep artisanal traditions.

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