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Picture Courtesy:   PIB

Context

Blockchain can secure centralized governance records with a distributed, tamper-resistant ledger, offering verifiable trust without intermediaries.

What is India's National Blockchain Framework?

The Ministry of Electronics and Information Technology (MeitY) launched the National Blockchain Framework (NBF) in 2024, with a Rs 64.76 crore budget, to establish a unified, secure, and transparent digital governance ecosystem.  

What are the Core Components and Pillars of the Framework?

Vishvasya Blockchain Stack

This is the indigenous and modular technology platform at the core of NBF. 

It operates as a "Blockchain-as-a-Service (BaaS)," offering distributed infrastructure across National Informatics Centre (NIC) data centers in Bhubaneswar, Pune, and Hyderabad. 

It provides the technical foundation for building and deploying permissioned blockchain applications, ensuring high resilience and distributed infrastructure.

NBFLite

NBFLite is a startup sandbox that provides a controlled environment for startups, research institutions, and academia to prototype and test blockchain-based applications. 

It offers smart contract templates for areas like supply chain management and digital certificates, thereby lowering the barrier to entry for emerging tech firms.

Praamaanik

This blockchain solution protects users from malicious apps and fraudulent customer support by recording each app's unique details on a blockchain ledger to verify its origin.

National Blockchain Portal

This online platform outlines India's strategic approach to blockchain adoption across governance and industry. 

It supports innovation, standardization, and cross-sector integration of blockchain applications, promoting trust and enhancing India's leadership in emerging technologies.

Why is India Focusing on Blockchain Technology for Governance?

Enhancing Trust and Transparency

Blockchain's immutable, distributed ledger improves data integrity, accountability, and public trust by preventing errors, fraud, and unauthorized changes.

Boosting Efficiency and Reducing Costs

Blockchain can boost government service efficiency and cut transaction costs by removing intermediaries and streamlining verification.

Combating Fraud and Corruption

Blockchain's secure, tamper-proof system is vital for protecting sensitive citizen data like land records, academic certificates, and supply chain logistics from fraud, thus directly combating corruption.

Enabling "Ease of Doing Business, Ease of Living, and Ease of Governance"

NITI Aayog's "Blockchain: The India Strategy" (2020) highlighted blockchain's potential to revolutionize interactions by allowing self-regulation through a trusted medium, reducing regulatory oversight, and empowering citizens with transparent and accountable systems.

Strengthening Digital India Initiative

The NBF aligns with the broader 'Digital India' vision by providing a robust, secure, and interoperable digital infrastructure for next-generation e-governance services.

Potential Applications across various sectors

Public Service Delivery

• Land Records: Initiatives like those in New Town Kolkata Development Authority (NFTs for land mutation) are ensuring transparent property ownership and mutation.
• Digital Certificates: Secure issuance, storage, and retrieval of academic, birth, caste, and income certificates. 
• Public Grievance Management: Uttar Pradesh's Firozabad system utilizes blockchain for secure complaint registration and tracking.
• Public Distribution System (PDS): Enables secure supply chain management for ration distribution.

Supply Chain and Logistics

• Drug Traceability: Used in pharmaceutical supply chains (e.g., Aushada in Karnataka) to ensure authenticity and combat counterfeit drugs.
• GST Chain: Provides real-time tax compliance monitoring.
• Food Supply Chains: Promote collaboration among food companies for transparency and traceability, particularly for export quality checks.
• Medical Asset Supplies: Uttarakhand government has implemented a blockchain solution for real-time insights into medical asset supplies across hospitals.

Financial Sector

• Central Bank Digital Currency (CBDC): The Reserve Bank of India (RBI) is leveraging blockchain for its Digital Rupee project, for traceable and transparent payments.
• Capital Markets: The National Securities Depository Limited (NSDL) adopted blockchain to create tamper-proof ledgers for tracking compliance and enhancing investor confidence.
• Regulatory Sandboxes: The RBI launched its sandbox in 2019 for "Retail Payments," including innovations with smart contracts and blockchain.
• Trade Finance: The RBI Innovation Hub piloted a multi-bank Letter of Credit (LoC) trade finance solution.

Judicial System

The Judiciary Chain and Inter-Operable Criminal Justice System (ICJS) use blockchain to improve efficiency and trust by ensuring secure, time-stamped records for all judicial data.

Telecom Sector

The Telecom Regulatory Authority of India (TRAI) integrates blockchain-based Distributed Ledger Technology to improve consumer protection and compliance.

What Challenges Does India Face in Adopting Blockchain?

High Implementation Cost

High initial blockchain infrastructure costs impede widespread public sector adoption.

Scalability and Performance

Even permissioned blockchains struggle with the technical challenge of scaling to handle a high volume of transactions and users required for a national framework.

Interoperability Issues

Ensuring seamless communication and data exchange between different blockchain platforms and existing legacy systems remains a complex task.

Regulatory Clarity (especially concerning cryptocurrencies)

Regulatory uncertainty, despite the Supreme Court lifting the RBI's crypto ban, harms Blockchain's reputation, due to the lack of comprehensive crypto legislation.

Skill Gap and Awareness

Blockchain technology's widespread adoption is hindered by a shortage of skilled developers and a general lack of understanding among stakeholders about its benefits.

Data Privacy Concerns

NBF's permissioned blockchains provide private data on transparent, immutable ledgers, but sensitive citizen data demands careful design and robust legal frameworks.

Way forward for the National Blockchain Framework 

Strengthen Capacity Building

MeitY's initiatives like FutureSkills PRIME, Post Graduate Diploma in FinTech & Blockchain Development (PG-DFBD), and training programs for government officials must expand to create a robust talent pool.

Foster Interoperability and Standardization

Developing clear, open standards for blockchain solutions will ensure seamless integration between different government departments and across various sectors, preventing data silos.

Encourage Public-Private-Academic Partnerships

Collaborative efforts between government, industry, startups, and academia are crucial for promoting blockchain innovation tailored to needs. The NBFLite sandbox is a positive step in this direction.

Develop a Progressive Regulatory Framework

India needs clear, predictable blockchain regulations that differentiate governance applications from speculative assets like cryptocurrencies to promote innovation and manage risks.

Pilot More Use Cases

Pilot blockchain applications in municipal services, healthcare, and tax systems, focusing on benefits and evaluation.

Address Ethical and Security Considerations

Maintain public trust in blockchain by implementing strong cybersecurity, regular audits, and clear ethical guidelines for data.

Conclusion

The National Blockchain Framework, leveraging its digital infrastructure, can implement a "Trust as a Service" model to improve governance and citizen services.

Source: PIB