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Business News/ Opinion / Blockchaining India’s digital future

Blockchaining India’s digital future

How a nascent technology could pave the way for Digital India

Blockchain promises to create more transparent, accountable, and efficient governments. Photo: BloombergPremium
Blockchain promises to create more transparent, accountable, and efficient governments. Photo: Bloomberg

Almost as soon as he was elected, India’s “reformer-in-chief" sought to upend the inefficiency and corruption endemic to the country’s lackadaisical bureaucracy. Citing bureaucrats’ struggle to get in their usual round of golf, The Washington Post’s Annie Gowen wrote, “Babudom is now in peril". Three years later, it seems the reports of Indian bureaucracy’s demise were greatly exaggerated.

While there is no denying that the Narendra Modi government has attempted to hold the babus accountable, these efforts have been misplaced. By targeting non-performing individuals in an archaic and defective system, Modi hopes to leverage his man-management skills to enable him to deliver on his campaign pledge of “minimum government, maximum governance". Such an approach, however, only offers stop-gap solutions while systemic governance issues are allowed to persist. Nowhere is this more apparent than in “Digital India", the government’s flagship initiative seeking to create an interface between the government and people. Though the initiative is often cited for its potential to realize the aspirations of 1.2 billion (and counting) Indians by bringing them into the 21st century, it betrays the lack of a sustained strategy and vision, particularly with respect to governance.

While the initiative has sought to create necessary technology architecture through programmes such as BharatNet, it has produced decidedly mixed results. Among 193 countries surveyed by the UN’s E–Government Development Index in 2016, India ranks 107th. Plagued by a lack of requisite infrastructure, poor execution, and ineffective supplementary programmes such as the National Digital Literacy Mission, Digital India hopes to achieve ambitious targets in an effort to further India’s attempts to catch up with the developed world. This, however, is not the right approach. Instead of promising revolutions through reactionary policies designed to help India catch up with the rest of the world, the government must instead focus on proactively pursuing practical policies designed to leapfrog the rest of world. To this end, the government needs to embrace innovative and nascent technologies that not only improve the lives of its citizens, but also compels the government to be better in the long-term.

Blockchain, the underlying technology behind Bitcoin and other cryptocurrencies, has the potential to optimize the delivery of public services, further India’s fight against corruption, and create considerable value for its citizens. By maintaining an immutable and chronologically ordered record of all actions and files (“blocks") linked together (“chain") in a distributed and decentralized database, Blockchain creates an efficient and cost-effective database that is virtually tamper-proof. By doing so, blockchain promises to create more transparent, accountable, and efficient governments. It is thus unsurprising that blockchain is already beginning to generate considerable interest.

In addition to private companies and banks, such as Tata Consultancy Services Ltd and ICICI Bank Ltd, blockchain has attracted interest from within the government as well. Earlier this year, the Reserve Bank of India’s Institute for Development and Research in Banking Technology published a white paper on the applications of blockchain to the banking and financial sector in India and concluded, “the time is ripe for its adoption". In April, the government also constituted an inter-disciplinary committee to examine the role of virtual currencies, such as Bitcoin, in India and submit a report by July. Blockchain’s applications in the public sphere, however, have yet to catch the eye of the Indian government. This is baffling; the technology is not only promising, but has even begun to be utilized by governments globally.

Across the world, innovation-friendly governments are launching blockchain-based programmes to enable them to get a head start on the future of government. Last year, future-friendly Dubai announced the adoption of a roadmap, Dubai Blockchain Strategy 2020, for the Emirate’s adoption of blockchain technology to improve the delivery of government services. Dubai’s government estimates it stands to save nearly $1.5 billion and 25.1 million hours in document processing time. For India, a country ranked 130th on the World Bank’s Ease of Doing Business Index (the United Arab Emirates ranks 26th), the benefits of blockchain are obvious and endless.

In addition to creating a more efficient government, blockchain can also help create a more honest government. A public blockchain, like the one Bitcoin uses, records all information and transactions on the decentralized database permanently, publicly, and most importantly, securely. By allowing governments to track the movement of government funds, blockchain can hold state and local actors accountable for any misappropriations.

Blockchain not only deters corruption through accountability, but it can also do so by bypassing the middleman entirely. Earlier this year, the World Food Programme began testing blockchain-based food and cash transactions in Pakistan’s Sindh province. Refugees in Jordan’s Azraq camp are now using the same technology, in conjunction with biometric registration data for authentication, to pay for food. With Aadhaar cards becoming nearly ubiquitous in India, adopting blockchain could be the next logical step in India’s pursuit of becoming a digital economy. Blockchain can play an important role in storing individuals’ data, helping conduct secure transactions, maintaining a permanent and private identity record, and turning India into a digital society.

Blockchain, however, is not a panacea. While it can help enhance the delivery of government services, it cannot replace an inefficient system. Although it can deter corruption by making governments more accountable and transparent, it cannot prevent the entering of false information into the network. Yet, it presents the government with a powerful opportunity. By embracing blockchain, it can create a bureaucracy that focuses on innovation and experimentation, a government that seeks to maximize efficiency and governance, and an economy sustained on the promise of technology.

By embracing blockchain, India can embrace its digital future.

Pranay Ahluwalia is a graduate student at King’s College London.

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Published: 29 Jun 2017, 04:21 AM IST
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