UPSC Prelims Practice Questions — The Government of India to launch the Central Bank Digital Currency (CBDC)-based Direct Benefit Transfer (DBT) in the Union Territories of Chandigarh and Dadra & Nagar Haveli

Q1. Consider the following statements comparing the CBDC-based food subsidy pilots launched in 2026: 1. The CBDC-based Public Distribution System pilot in Gujarat was launched at Gandhinagar by the Union Home Minister and Minister of Cooperation. 2. The CBDC-based Direct Benefit Transfer pilot under PMGKAY in Puducherry was inaugurated by the Lieutenant Governor of Puducherry in the presence of the Union Minister for Consumer Affairs, Food and Public Distribution. 3. While the Gujarat pilot was confined to four districts of a State, the subsequent rollout of the model extended it to Chandigarh and Dadra & Nagar Haveli, that is, to Union Territories. Which of the statements given above is/are correct?

  1. The CBDC-based Public Distribution System pilot in Gujarat was launched at Gandhinagar by the Union Home Minister and Minister of Cooperation.
  2. The CBDC-based Direct Benefit Transfer pilot under PMGKAY in Puducherry was inaugurated by the Lieutenant Governor of Puducherry in the presence of the Union Minister for Consumer Affairs, Food and Public Distribution.
  3. While the Gujarat pilot was confined to four districts of a State, the subsequent rollout of the model extended it to Chandigarh and Dadra & Nagar Haveli, that is, to Union Territories.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q2. Which one of the following was the designated banking partner for the CBDC-based food subsidy Direct Benefit Transfer pilot operationalised under PMGKAY in Puducherry in February 2026?

  • A. Indian Bank, working with the Public Financial Management System
  • B. Canara Bank, working with the Public Financial Management System
  • C. State Bank of India, working with the Public Financial Management System
  • D. Union Bank of India, working with the Public Financial Management System

Q3. The Reserve Bank of India commenced the first pilot of the retail Digital Rupee (e₹-R) on 1 December 2022. In its first phase, how many banks and how many cities did this pilot initially cover?

  • A. Nine banks, across four cities
  • B. Eight banks, across five cities
  • C. Four banks, across four cities
  • D. Five banks, across thirteen cities

Q4. With reference to the Digital Rupee (e₹) issued by the Reserve Bank of India, consider the following: 1. It has the status of legal tender under Section 26 of the Reserve Bank of India Act, 1934. 2. It is issued in the same denominations as the currency notes and coins presently in circulation. 3. Balances held in an e₹ wallet earn interest at the rate applicable to savings bank deposits. 4. Opening and holding an e₹ wallet requires the maintenance of a prescribed minimum balance. Which of the statements given above is/are correct?

  1. It has the status of legal tender under Section 26 of the Reserve Bank of India Act, 1934.
  2. It is issued in the same denominations as the currency notes and coins presently in circulation.
  3. Balances held in an e₹ wallet earn interest at the rate applicable to savings bank deposits.
  4. Opening and holding an e₹ wallet requires the maintenance of a prescribed minimum balance.
  • A. 1 and 2
  • B. 2 and 3
  • C. 1, 2 and 4
  • D. 3 and 4

Q5. The beneficiary base to which free foodgrains are supplied under PMGKAY is derived from the coverage ceiling laid down in the National Food Security Act, 2013. That ceiling is fixed at which one of the following levels?

  • A. Up to 67 per cent of the rural population and up to 50 per cent of the urban population
  • B. Up to 75 per cent of the rural population and up to 65 per cent of the urban population
  • C. Up to 50 per cent of the rural population and up to 75 per cent of the urban population
  • D. Up to 75 per cent of the rural population and up to 50 per cent of the urban population

Q6. The integrated food security scheme supplying free foodgrains to Antyodaya Anna Yojana and Priority Household beneficiaries is administered by which one of the following?

  • A. The Department of Consumer Affairs, under the Ministry of Consumer Affairs, Food and Public Distribution
  • B. The Department of Rural Development, under the Ministry of Rural Development
  • C. The Department of Food and Public Distribution, under the Ministry of Consumer Affairs, Food and Public Distribution
  • D. The Department of Agriculture and Farmers Welfare, under the Ministry of Agriculture and Farmers Welfare

Q7. The Direct Benefit Transfer Mission, which had been moved to the Department of Expenditure in July 2013, was subsequently placed with effect from September 2015 under which one of the following?

  • A. NITI Aayog, under the Member-Secretary concerned
  • B. The Cabinet Secretariat, under the Secretary (Coordination and Public Grievances)
  • C. The Prime Minister's Office, under the Additional Principal Secretary
  • D. The Department of Financial Services, under the Secretary (Financial Services)

Q8. With reference to the JAM trinity that underpins the Direct Benefit Transfer architecture in India, consider the following: 1. The 'J' denotes the no-frills bank accounts opened under the Pradhan Mantri Jan Dhan Yojana. 2. The expression 'JAM Number Trinity' was popularised by the Economic Survey chapter titled 'Wiping every tear from every eye'. 3. The 'M' denotes the job cards issued under the Mahatma Gandhi National Rural Employment Guarantee Act, used to identify rural beneficiaries. 4. Aadhaar supplies the unique identity layer that permits de-duplication of beneficiaries across welfare schemes. Which of the above is/are correctly identified?

  1. The 'J' denotes the no-frills bank accounts opened under the Pradhan Mantri Jan Dhan Yojana.
  2. The expression 'JAM Number Trinity' was popularised by the Economic Survey chapter titled 'Wiping every tear from every eye'.
  3. The 'M' denotes the job cards issued under the Mahatma Gandhi National Rural Employment Guarantee Act, used to identify rural beneficiaries.
  4. Aadhaar supplies the unique identity layer that permits de-duplication of beneficiaries across welfare schemes.
  • A. 1 and 3
  • B. 2, 3 and 4
  • C. 1 and 4 only
  • D. 1, 2 and 4

Q9. Before the CBDC-based food subsidy transfer was extended to Chandigarh and Dadra & Nagar Haveli, in how many States/Union Territories had the model been operationalised, and on what footing?

  • A. One, a single State, in which every fair price shop was converted to CBDC-only transactions
  • B. Two, one State and one Union Territory, in each case as a limited pilot running alongside the existing PDS
  • C. Four, all of them States, with the entire NFSA beneficiary base migrated to CBDC wallets
  • D. Two, both of them Union Territories, in each case wholly replacing the existing distribution channel

Q10. In the CBDC-based food subsidy pilots, the digital rupee credited to a beneficiary is described as 'purpose-bound'. In operational terms, this most precisely means that:

  • A. the tokens are credited only after the beneficiary declares the intended purpose of the drawal to the fair price shop dealer
  • B. the tokens must be spent within the same calendar month, failing which the food subsidy lapses to the Consolidated Fund of India
  • C. the tokens can be redeemed only for the entitled quantity of foodgrains at fair price shops or authorised merchants, and cannot be spent otherwise
  • D. the tokens may be transferred to any merchant, but the ration dealer must certify the purpose of each transaction before settlement

Q11. Which one of the following correctly describes the office that heads the administration of the Union Territory of Chandigarh?

  • A. Chandigarh has had its own Lieutenant Governor, separate from the Governor of Punjab, ever since it became a Union Territory in 1966
  • B. Chandigarh is headed by a Chief Commissioner who is, in every case, the senior-most officer of the Haryana cadre of the Indian Administrative Service
  • C. The Administrator of Chandigarh is invariably drawn from among the sitting judges of the Punjab and Haryana High Court
  • D. The Governor of Punjab has functioned as the Administrator of the Union Territory of Chandigarh since June 1984

Q12. Consider the following statements comparing programmable CBDC-based transfer of food subsidy with conventional bank-account Direct Benefit Transfer: 1. Programmable e₹ tokens can be constrained by parameters such as a validity period, a geographical area or a merchant category, which a credit to a beneficiary's savings account cannot be. 2. In the CBDC-based food coupon model, redemption at the fair price shop can be effected through a coupon or QR code, dispensing with repeated biometric authentication at the point of sale. 3. Because the digital rupee is issued by the Reserve Bank of India, the wallets in which beneficiaries hold it are opened and maintained by the Reserve Bank itself, removing banks from the distribution chain. Which of the statements given above is/are correct?

  1. Programmable e₹ tokens can be constrained by parameters such as a validity period, a geographical area or a merchant category, which a credit to a beneficiary's savings account cannot be.
  2. In the CBDC-based food coupon model, redemption at the fair price shop can be effected through a coupon or QR code, dispensing with repeated biometric authentication at the point of sale.
  3. Because the digital rupee is issued by the Reserve Bank of India, the wallets in which beneficiaries hold it are opened and maintained by the Reserve Bank itself, removing banks from the distribution chain.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3