Blockchain is becoming a game changer in India. In the next five years, the use of this technology will grow by about 46%, according to Nirmala Sitharaman, Minister of Finance and Corporate Affairs of India. The forecast was presented on Tuesday, during the third edition of the FICCI LEADS summit held in New Delhi.
The politician also said that the future of financing in India lies in digitization. She noted that in July 2022 alone, 6.2 billion electronic transactions worth Rs 10.6 trillion (over $132 billion) were made. In Indian rural areas, brick-and-mortar bank outposts are frequently unavailable. Due to digitization, local residents can access banking services through online applications.
The evolution of finance technology in India will be underpinned by artificial intelligence, which will enhance the detection of fraud and other financial crimes, Sitharaman stressed. AI will also play a significant role in preventing economic crises and black swan events. According to the Minister, the finance sector will increasingly have to deal with VUCA (volatility, uncertainty, complexity, and ambiguity), and AI will help quantify risk.
The blockchain growth estimation for India seems especially interesting in the context of the government's – and the Finance Minister's herself – resistance to cryptocurrencies. At the beginning of February, Sitharaman proposed a 30% tax on any income from the transfer of digital assets – a rate equal to the highest tax threshold according to the current income tax slab rate. New regulations went into force on April 1.
In July, the Indian government informed the parliament of the central bank's plan to ban cryptocurrencies. Sitharaman justified that proposal by growing concerns about the "destabilizing effect of cryptocurrencies on the monetary and fiscal stability of a country." The government will announce its final stance on the legality of crypto assets by the first quarter of 2023.
It seems like we're witnessing just another grim reminder that blockchain and cryptocurrencies are not synonyms.