India is currently the world’s seventh-largest economy. Yet, things have been looking gloomy since the night of 8th November 2016 when the government shockingly announced a countrywide demonetization and banned all the Rs. 500 and Rs. 1000 currency notes in its fight against corruption. Overnight, a country of 1.2 billion people had to shift to cashless and digital transactions. Demonetization, coupled with messy GST implementation has caused a slow growth rate of the Indian economy, and the COVID lockdowns in 2020 have added salt to the wounds. A recent UN report has stated that India’s economy will contract by 5.9% in 2020 amid this coronavirus situation.
Even though there have been few silver linings, which obviously have been overshadowed by the troubled conditions and circumstances the Indian economy is in right now, the massive increment and rise of digital/ cashless payments stands out. The fintech market has seen enormous growth and has peddled the economic growth in some way or the other. The World Economic Forum (WEF) has reported that the number of digital transactions in India which have catapulted following the demonetization policy is a massive plus for the government. It is so because it will provide them with an increased ability to track the flow of money within the economy. It is also a big plus for Blockchain and cryptocurrency to step into the scene as well. Even though the crypto transactions were banned in 2018 after a string of frauds in the months following government’s sudden decision to ban 80% of the nation’s currency, cryptocurrency exchanges responded the ban with a lawsuit in the Supreme Court and won respite in March 2020.
If, as will be the case for any government in the world, the Indian government wants to boost its cashless economy, it needs to find lasting solutions to the challenges confronting the propagation of a more fluid and seamless cashless economy. Some of those challenges include financial inclusion, high setup and transaction costs and transaction times. In essence, for the government to efficiently run a cashless economy, there is a dire need for an alternative to traditional financial SE alternatives seems a good entry point for Blockchain. Blockchain technology almost eliminates the need to belong in the traditional financial system, in order to be financially included. It can also enable ease of collaboration for enterprises and the ease of living for the Indian citizens by bringing in transparency across government and private sector interfaces. The technology also has the potential to entirely revamp the current existing processes to unlock new sources of efficiency and value.
Even though India has registered phenomenal progress and has gained 79 positions since 2015 to be ranked 63rd in the 2020 ‘Ease of doing business’ edition, it continues to perform abysmally low in several other indicators which demands immediate scrutiny such as ‘enforcing contracts’ (ranks 163 out of 190 countries), ‘property registration’ (154 out of 190 countries) and ‘starting a business (136 out of 190 countries). Introducing blockchain technology and crypto transactions might be the silver bullet to solve these issues and the Indian economy’s final hail, Mary. Talking from a global perspective, it is estimated that Blockchain could generate $3 trillion per year in business value by 2030. WEF also anticipates that 10% of the global GDP will be stored on Blockchain by 2025. It also lists Blockchain as one of 7 technologies that are expected to revolutionize various aspects of our lives.
The solution is at the heart of sharing economies by adopting and embracing upcoming technologies.