As India, the world’s largest democracy, recently concluded a mammoth seven-phase general election, experts and exit polls have largely predicted the return of Prime Minister Narendra Modi with a thumping majority.
Modi’s win will be historic in the sense that no other Prime Minister in India has been able to win three terms consecutively from 2014 to 2024. But what will Modi’s victory mean for the advent of Blockchain technology in this country?
According to the World Economic Forum (WEF), by 2024, at least 10% of the world’s GDP will be stored in blockchain and the revenue generated by this technology will surpass $3 Trillion USD by 2034. India, being the most populous nation, is also eyeing the potential of blockchain technology and the way to incorporate it in public and private sectors.
While India’s central bank- Reserve Bank of India- has largely shown its contempt and skepticism towards Bitcoin and other cryptocurrencies, the government of India (GoI) has been positive towards blockchain technology and its ability to transform governance.
In this report, we will highlight the current status of blockchain adoption in India, its utility and potential, challenges associated with widespread adoption and the Indian government’s long term vision regarding the technology. We will be using analysis reports and white papers from private financial consultancy as well as NITI (National Institution for Transformation of India) Aayog and MeitY (Ministry of Electronics and Information Technology) departments of the Indian government.
India’s Tryst with Blockchain
Although blockchain technology or decentralized distributed public ledger system, was introduced as a concept in 2009, it’s been in vogue for the past five years only. After the Modi government had won a second consecutive election in 2019, its premier think-think policy organization NITI Aayog released a white paper named “Blockchain- The India Strategy” Part 1 in 2020 to highlight the government’s current projects and its long term vision with blockchain.
As per NITI Aayog, since 2019, the GoI has introduced blockchain as a pilot project in four key sectors- drugs supply chain in pharmaceutical industry, claim verification in fertilizer disbursement, verification of university certificates and transfer of land records. The proof of concept (PoC) project by GOI in these four sectors revealed that by using blockchain technology, they were able to achieve multi dimensional results with greater efficiency.
Blockchain in Pharma
To prevent adulteration of life saving drugs and ensure that genuine medicines reach patients from manufacturer to wholesaler to retailer to local chemist, the NITI Aayog launched a pilot project with blockchain technology. Products were registered with licenses and time stamps and introduced in the ledger while stakeholders were encouraged to track deliveries through a mobile application. It was found out that there was increased transparency, efficiency, and reliability of transactions as all stakeholders could gain real time data access of time stamps, ingredients, excipients, temperature and cold storage availability for products during logistics.
Blockchain for Fertilizers
NITI Aayog ran a pilot project for the disbursements of funds from Department of Fertilizers (DoF) to Gujarat Narmada Valley Fertilizers and Chemicals (GNFC)- one of the largest fertilizers manufacturing companies of India. The intent behind the exercise was to streamline the disbursements process, cut costs and increase overall efficiency. Use of blockchain technology showed that manufacturers could get real time data of logistics, acknowledgement of receipts and real time data of losses incurred if any. Similarly, retailers and farmers could check the quality of fertilizers along with certification while the department of fertilizers could get holistic data with minimal chances of corruption and other malpractices.
Blockchain in Land Records
Property rights in India, like in many countries, is a complex subject riddled with legalities. NITI Aayog had found in its PoC study of land records in Chandigarh union territory that blockchain could help in streamlining the process of land records; however, it required change in laws for any widespread adoption due to a number of pre-existing state and central laws.
Blockchain in University Certificates
NITI Aayog collaborated with Indian School of Business (ISB) and Bitgram to create a prototype decentralized ledger of university certificates for students in order to avoid chances of fraud. Under this plan, ‘SuperCert’- a hashed version of certificate was generated for each student which had an original timestamp, that could prevent any chances of tampering.
Blockchain Use at Decentralized Level in India
Local and state governments are also incorporating blockchain into their systems. For example, nearly half of the states are working on blockchain projects.
For example, the New Town Kolkata Development Authority in West Bengal has used NFTs to manage land ownership records. This makes the process transparent and avoids the need for manual paperwork. The municipal corporations in Durgapur and Bankura districts have created a blockchain-based platform for issuing legal documents like birth certificates.
Tamil Nadu has launched the “Nambikkai Inaiyam” project to give every citizen a unique state ID that combines all their important documents into a single digital wallet, accessible through the e-Pettagam App. Karnataka has a similar project called the “Unified Land Management System.”
In Uttar Pradesh, the government has partnered with Polygon to create the “Firozabad Public Grievance Management System,” an online portal that uses blockchain to file and track complaints, ensuring transparency and preventing tampering by corrupt officials.
Future Roadmap for Blockchain in India
The GoI is currently working on a “National Blockchain Framework” to build a national blockchain infrastructure which aims to create “Made in India” blockchain technology for global use by 2027. This will integrate blockchain with other technologies like the Internet of Things, cloud computing, and Artificial Intelligence, collectively called the “BICA Stack.”
Although the Reserve Bank of India has been cautious about cryptocurrencies, it is developing its own digital currency, the digital rupee. This will reduce the need for physical cash and improve online payment systems while protecting people from the risks of private virtual currencies.
Possible Challenges to Widespread Adoption of Blockchain Technology in India
Regulatory and Legal Framework
The lack of a clear regulatory framework poses a significant challenge. There is a need for comprehensive regulations to address issues related to data privacy, security, and legal recognition of blockchain-based transactions. Moreover, state and central governments need to work in tandem for deeper penetration of blockchain technology in India.
Technological and Infrastructure Barriers
Implementing blockchain at high scale requires significant investment in infrastructure and technological upgradation. The current digital infrastructure in many parts of India may not be sufficient to support larger blockchain adoption.
Awareness and Skill Gaps
There is a need to increase awareness and understanding of blockchain technology among stakeholders, including government officials, businesses, and the general public. Additionally, a shortage of skilled professionals in blockchain technology can hinder its adoption.
Interoperability and Standards
Ensuring interoperability between different blockchain platforms and establishing industry-wide standards is crucial for integration and widespread adoption of the technology. However, Many Indian startups are now working in the same direction to address this issue.
Future of Blockchain Technology in India under Modi’s Continued Leadership
If the Modi government secures a third term, the future of blockchain technology in India looks promising. The government’s proactive stance and comprehensive strategies indicate a strong commitment to leveraging blockchain for national development.
By doing so, the government could improve public and private services currently facing issues like transparency and corruption. Additionally, the digitalization of intellectual property will become easier with DLT technology.
The continued focus on enhancing digital infrastructure, regulatory frameworks, and skill development will be critical in overcoming current challenges and realizing the full potential of blockchain technology.
Furthermore, India could see a better and more solid regulatory framework for digital assets like cryptocurrency in the upcoming term of the Modi government. As many crypto innovations currently face operational issues within the country, a clear and dedicated regulatory framework can provide them with a gateway to scale their businesses.
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