Blockchain technology has developed as a potentially transformative factor that is reshaping various aspects of government operations. Although this technology is still in a nascent stage of its evolution and approval as it proceeds to grow, the government’s Niti Aayog in its recent ‘Blockchain: The Indian Strategy’ report stated that policymakers must understand and incorporate blockchain technology in their operations.

By this report, Niti Aayog CEO Amitabh Kant believes that it will assist in starting a dialogue on blockchain and helping various government instrumentalities to examine how this technology is wholly leveraged for the prosperity of society.

In the report, Niti Aayog proposed the government institutions to combine decentralized networks promoting peer-to-peer transactions to produce more socio-economic value.

Government entities associated with ledger maintenance or collecting state can adopt blockchain in their day to day proceedings, the report added. “For example, blockchain-based distributed ledger technology (DLT) can help in maintaining land and property transactions, which are essentially peer-to-peer transactions. With the development of DLT, it may not be necessary for the government to maintain records anymore,” the report said.

With this report, Niti Aayog also emphasized that while electing a particular blockchain-based technology, the government should first understand the legal, technical, and regulatory requirements before including in its operations. “It is also incumbent upon stakeholders to understand in which cases the technology adds value and in which cases it does not,” the report added.

Use Cases Of Blockchain In Government Operation

 Presently, Niti Aayog is looking at four-use cases of blockchain technology in phases such as tracing and tracking of drugs in the pharmaceutical supply chain, claim verification, and approval in the disbursement of fertilizer subsidy, check of university certificates, and transfer of land records.

NITI Aayog has been evolving proof of concepts (PoCs) in these four areas to deliver improved efficiency and better understand possible hurdles in implementation.

For utilizing blockchain in agriculture, Niti Aayog stated that this technology has the potential to modify the sector by producing an audit trail of all farmers provide and eliminating the suspicion between farmers and agents.

Problems With Blockchain

Highlighting one of the issues faced in the implementation of the blockchain technology, Niti Aayog stated that for the fertilizer subsidy pilot, the difficulty that it faced was diminishing the turnaround time for compensation of subsidies payments and freight claims.

Other problems that Niti Aayog faced in this pilot project were incompetence in record management, trusting credibility of the generating data, and limited visibility for inventory stocks. “There was a valid problem, deeply embedded in business rationale,” Niti Aayog added.

Other hurdles that Niti Aayog highlighted in its report are the initial cost of implementation, nascent developer community, human resource constraints, and sustainability of transactions.