Story Highlights

IndiaChain is the government’s plan to implement a full-fledged blockchain infrastructure that will complement IndiaStack and could even use Aadhaar

It will revolutionise the way subsidies are distributed – to start with in farming in the form of fertilisers – and increase trust in areas such as organic food

IndiaChain, the brainchild of NITI Aayog, could play a big role in regulating land records to remove duplication, KYC in banking, financing among SMEs, electricity distribution, court cases etc.

NITI Aayog, the government of India think-tank, is working on building the country’s largest blockchain network – IndiaChain – with a view to reduce frauds, speed up enforcement of contracts, increase transparency of transactions, and boost the agriculture economy of the country, according to multiple sources.

IndiaChain will be linked to IndiaStack and other government digital identification databases. IndiaStack, a set of code developed around India’s unique identity project Aadhaar, helps developers build products and services riding on the country’s digital infrastructure.

When operationalised, India’s will likely be the largest scale of blockchain implementation in governance anywhere in the world. Just last month, FactorDaily had written about the potential of blockchain in Indian public services.

Blockchain is a decentralised distributed digital ledger collectively maintained by a network of computers, called nodes. Think of it as a large record book shared among many people. What makes the blockchain secure is that no data can be modified by one person without everyone else who maintains the records agreeing to the change. Also, the record book is not stored in one place but instead is distributed among the bookkeepers ensuring that there is no single point – as in the case of centralised database – using which records can be tampered with. This makes blockchain virtually unhackable and secure.

NITI Aayog officials and others working on the project told FactorDaily that the government is in the process of firming up regulations for the use of blockchain technology in the country. But before that, the government is looking at some large-scale deployments – starting with e-signatures of individuals.

“Let’s start with the low hanging fruits first. This is just the beginning of a government-led blockchain initiative… There is a long way to go,” said an executive, who has been in discussions with NITI Aayog on implementing a nationwide blockchain network, asking to stay anonymous.

The meetings between industry stakeholders and NITI Aayog, presided by its CEO Amitabh Kant, started a little over two months ago, and is moving at speed. “Two months ago, conceptualising of one common infrastructure for blockchain began,” said a second source, who is also working with the government on the IndiaChain initiative.

“Blockchain can play a big role in ease of doing business,” said Anna Roy, advisor with NITI Aayog, while talking at the curtain raiser of a blockchain Hackathon at IIT-Delhi, organised by blockchain startup Proffer and NITI Aayog. “(Blockchain) can play a role in maintaining the sanctity of contracts. Contractual issues remain one of the biggest roadblocks… leading to a lot of frauds. Blockchain can play a role in financing, too.”

The hackathon was to build applications “addressing problems in government and enterprise infrastructure, finance, energy markets, supply chain, decentralised Aadhaar identities, information exchange, and more”, according to NITI Aayog.

Farm premium

IndiaChain in its first phase will take into its fold agriculture, land records, and electricity distribution ‘proof of concept’ or PoC cases. Eventually, it will be linked with Aadhaar to secure individual identity.

The second source said that it is too early to give projections on the scale, budget, and early milestones of the project.

The government has started working on generating soil health cards (details of which are available here) for agricultural land in India. This will allow every patch of land to be digitised in terms of quality of land, what crops are grown, how many times a year, and so on.

According to a senior official in NITI Aayog, the soil testing data will be tracked using the blockchain. The blockchain-based system will also help in identifying fertilizer requirements for different patches of land and also keep track of crop or vegetable cycles on these farms lands. The official requested anonymity as regulations for IndiaChain are still in works

The impact on agriculture could be far-reaching. IndiaChain will combine the big picture with minute detail on which soil where needs what kind of fertiliser. There is, for instance, a predominant use of urea, a fertiliser on subsidy. “But one land might need nitrogen and another might need sulphate or phosphate. You don’t give the same medicine to every patient,” the official said.

“There are a lot of challenges. Once there is progress, the secretary of IT and Mr Kant will look at the legal framework,” he said. India’s IT secretary is Aruna Sundararajan.

Further down in the supply chain, the crops and the vegetables can be tracked and tagged once it reaches the market. The merchant will know which produce was grown completely organically and which one had fertilisers. “There is a lot of premium that is given (to produce from) a soil which has never used fertiliser,” the NITI Aayog official said.

Prime Minister Narendra Modi has told NITI Aayog to find out ways to use small gadgets to test the soil in an attempt to speed up the process, the official said.

“There needs to be a software on the chip that puts these data on the blockchain,” Garrett MacDonald, blockchain fellow at Germany-based Energy Web Foundation, told FactorDaily. MacDonald is working on the use of blockchain in the areas of agriculture, electricity, and transportation.

In the next phase, the government will look at loading rainfall data onto the blockchain. “It is to know how much rain happened where. Then, insurance products can be built… Everything can be put on the blockchain,” the official said.

Reimagining public records

There are more than four million cases of land disputes pending in the country. Blockchain, this official said, can help in reducing these cases in the years to come.

There is often a mismatch on what the original dimensions of a property are and what’s mentioned on property papers. Other problems include multiple stake claims on the same property, mostly because of lack of a conclusive land titling system.

The government is working on that, the official confirmed. Work is already on its way in the states of Telangana and Andhra Pradesh. “Once the document is done (on blockchain), nothing can change in the document. When you buy a land you will get all the documents of all the land since a long time back,” said the official.

Other uses that NITI Aayog is looking at include school and college leaving certificates, which see a high degree of forging and duplication. Blockchain can also come in handy for managing documents and evidence records in courts.

IndiaChain will also see how to change the way electricity distribution is done under what is called open access. Currently, every user in a particular locality gets electricity from the same distributor. But, as is being experimented in Oslo, Norway, there is nothing that stops a consumer buying electricity any provider of his or her choice. “That can be done using blockchain. That is amazing. We are on that track, but we are slow,” said the official without more detail.

The Brooklyn Microgrid, developed by energy services company LO3 Energy, is an example of peer-to-peer green energy microgrid working on the blockchain.

Early adopter India

Once IndiaChain comes into full swing, India will perhaps be the first of the large economies to build a nationwide blockchain network to power governance.

Estonia is currently the leader in blockchain adoption. Nasdaq Inc. has successfully tested blockchain technology to power a proxy voting system on its Estonian exchange and is now assessing its full-scale implementation. Once implemented, the new system will allow investors on Estonia’s only regulated secondary securities market, the Tallinn Stock Exchange, to vote online during investor meetings or transfer their voting rights to a proxy.

Estonian eHealth Foundation is using a blockchain-based system to process and store patient health records.

The Russian government is also planning to test a blockchain-based system for land registry management early next year.

The government of Dubai, under its Smart Dubai initiative, is also planning to implement blockchain-based solutions to bring a paperless digital layer for all city transactions like visa applications, bill payments, and licence renewals.

In 2016, over $1 billion investments went into blockchain-based companies.

Technology experts and investors believe that like mobile was a decade ago, blockchain will be the disruptor in the coming one decade. “The second wave of technology disruption is IndiaStack, and that will be in the fintech space,” said the second source.

But, this source said, IndiaChain will need to address identity, privacy, and policy. “In identity, IndiaChain will complement IndiaStack… It is about how the identity of individuals can be used on blockchain to deliver services,” he said.

The Aadhaar connect

IndiaChain’s integration with Aadhaar makes identity verification easier. “One-time password and biometric has its own challenges (during transactions)… verification of Aadhaar for every transaction can be done on blockchain,” said Sandeep Goenka, cofounder of Zebpay, a bitcoin exchange. Virtual currencies like bitcoins run on blockchain.

Goenka added that know your customer (KYC) data can be put on blockchain so that organisations and government can use it without the individual having to go through the process every time. Goenka was speaking at the event at IIT-Delhi on Friday.

BankChain, a consortium of Indian and international banks, is also in the process of developing blockchain-based systems for KYC identification, contract management, loan syndication, peer-to-peer payments, cross-border remittance etc. State Bank of India is said to be in the process of piloting some of these systems in India.

Others believe that blockchain, and in this case IndiaChain, will play a huge role in building trust among individuals, communities and the government. “Blockchain is a way to infuse trust in business networks… (but) you will need to do some rip and replace as a new digital network is built in India,” Sriram Raghavan, director of IBM Research, said at IIT-Delhi.

Small and medium businesses could benefit. “SMB face working capital challenge… They need banks to fund that. With blockchain, banks can easily see if the goods have been delivered, sign-offs and goods received,” Raghavan added, saying that financing to SMB has a dismal penetration of 1-2%, while in developed countries is 10%.

While there are multiple benefits of IndiaChain, it will have its own challenges. The government will also have to find out ways to protect the privacy of individuals and companies on IndiaChain, as blockchains are usually open ledgers for everyone to see – especially when it comes to governments tenders and sale of property. “The government will have to find ways to hide the bids… Also, the price at which a property is sold should not be visible to others,” said the second source.

According to the first source, the hard work has already been done by a nationwide implementation of Aadhaar. “Building services on top of that makes a lot of sense,” he said.

That’s what the government plans to do with IndiaChain. “Right now it’s a concept, but once there is a use case, we can call it as the first product of IndiaChain. These are all uncharted territory,” said the executive.