By Hannah Sarasu John
Cryptocurrency and Blockchain technology have had a confusing encounter with the Indian government. Over the last few years, the industry has seen immense growth with high volumes of trading and investment in both Indian and international cryptocurrency exchanges. However, this journey has been complicated by occasional bans, high taxes, and a general arms-length approach from the government. More recently however, the Indian government has advocated the creation of a global regulatory framework in their capacity as the head of the G20 and has been a key player in the publishing of the synthesis paper by the IMF and the Financial Stability Board on suggestions for regulation.
More importantly however, India has also attempted to explore methods for including Web3, blockchain, and cryptocurrency in governance. PM Narendra Modi’s push for good governance through his ever popular slogan of ‘Maximum Governance, Minimum Government’ seems to be making a very strong case for adoption of blockchain technology and cryptocurrencies, even if not explicitly. Various jurisdictions have been experimenting with blockchain technology to improve governance, especially in urban areas, for their digitalisation programs and India is no different.
Pioneering Blockchain Applications in Indian Governance
An important example has been NITI Aayog’s launch of a blockchain module in partnership with crypto-focused 5ire and Network Capital to create and promote a culture of innovation for entrepreneurship. Through the Atal Innovation Mission, the collaboration has become the world’s first blockchain unicorn aligned to the UN’s Sustainable Development Goals.
The Ministry of Electronics and Information Technology (MeitY) has also begun encouraging product development to allow users to use crypto tokens to digitally sign documents through
special web browsers. MeitY has also released numerous papers on using blockchain technology to release e-Tenders and publish bids for government outsourcing and public private partnerships. Since this has been an area that has historically lacked transparency (especially in the case of the 2G Spectrum allocation), there have been many successful feasibility checks to ensure that this is possible.
Internationally, one promising use case for blockchain in the government sector is in the area of citizen services and asset registration. The added transparency components can prove especially promising to build a tamper-proof system of government certificates as well as immutable records of transactions and documentation. Countries such as Estonia have launched blockchain based land registry systems to reduce fraud and increase transparency in the registration process whereas Brazil’s blockchain based platform has been used for citizens to track public spending. These innovations have bolstered the attempt to reduce the crisis of corrupt governance.
Another popular application of blockchain technology is the institution of blockchain identity technologies, as in the case of British Columbia and Singapore. Blockchain based digital identity systems can be used to give citizens more control over their personal data while also improving verification and service provision for specific beneficiaries. The system would require the same information as an Aadhar but is accessible to both the government as well as the citizen.
Next steps for the Indian government?
As India delves deeper into the vast possibilities presented by blockchain and cryptocurrency, it’s imperative for the government to fortify infrastructural and policy frameworks to harness their full potential. A unified approach involving key governmental entities such as MeitY, NITI Aayog, and the Ministries of Home and Finance could lay the foundation for a centralized body, dedicated to crafting well-informed policies, underpinned by sectoral insights and focused on optimizing public service delivery.
Furthermore, a robust ecosystem thrives on collaboration. Engaging with Indian blockchain innovators, academia, and tech giants can stimulate innovative solutions tailored to India’s unique challenges and opportunities. Parallelly, elevating public comprehension through targeted awareness campaigns will ensure that citizens remain both informed and vigilant about the manifold implications of these burgeoning technologies.
Embracing a phased approach, the government could initiate modest pilot projects. This iterative strategy not only aids in technological validation but also fine-tunes strategies based on tangible results. Moreover, drawing insights from international counterparts and tech conglomerates experienced in integrating these technologies for governance can catalyze India’s journey towards a transparent, efficient, and inclusive digital governance framework.
Navigating New Frontiers
As the global landscape shifts towards a more digital, transparent, and efficient future, India stands at a pivotal juncture. The nation’s proactive approach towards integrating cryptocurrency and blockchain technology into its governance mechanisms is not just a reflection of technological advancement but is emblematic of a new era of progressive governance. India’s significant presence on international platforms, combined with its internal initiatives, showcases its potential to be a beacon for countries navigating the crypto frontier. The road ahead is undeniably fraught with challenges, but with a harmonized synergy between policy-making and technological innovation, India is poised to craft a blueprint for digital governance that the world might soon emulate. As the world watches, we can expect India to not just follow but lead the narrative in defining the confluence of technology, governance, and public service in the 21st century.
The author is Public Policy Team, BNS
