Blockchain in the Implementation of Government schemes (Part 59)
Welcome to the 59th part of the 100-part series on Blockchain.
The efficient flow and storage of citizens’ data for providing services to them is of paramount importance for any government organization. In the current scenario, centralized Database Management systems represent the majority of the databases for storing this information about people in the world. In every country, there are a lot of government schemes.
Challenges in the implementation of government schemes
But many challenges arise in the implementation of these schemes:
(i) Many needy people cannot avail the schemes because of the corruption involved in the process. A lot of money disbursed by the government under such schemes gets siphoned off by middlemen, thus leaving many needy people either with unpaid wages or less than standard wages.
(ii) The second challenge is data manipulation. This situation arises when user data entry is first done in manual registers at one location of the users, and then the copy of this register is transported to another location for entry in the database. Because of this process of data entry at multiple points and storage of data in different central databases, third-party manipulation is highly possible before data entry in centralized databases. These manipulations pertain to changing, faking, or delaying user data intentionally.
(iii) Even if the data manipulations are not done, delays in availing services might occur due to labor-intensive paperwork and slow inter-bureaucratic communications.
Let’s understand how Blockchain can help in the efficient implementation of government funds through a real-world example. A social welfare scheme was started by the Indian government for laborers in India. The scheme aimed at providing 100 days of guaranteed employment to laborers from the rural parts of India. If employment cannot be provided, an unemployment allowance must be delivered to those laborers.
In implementation of such schemes, an effective communication between the needy people and the government that will arrange funds for them is crucial for the smooth implementation of the scheme. For this communication, there come third-party intermediaries that handle the data of laborers and subsequently ensure funds are disbursed to the laborers. However, there are various challenges in the effective implementation of the scheme. The money provided by the government for the scheme can be exploited.
· Firstly, a huge number of applications received by the Government to provide money and job to laborers are not always correct.
· Local authorities issue more job cards than the number of workers employed to acquire a larger amount of funding from the government. These local officers then pocket the excess money.
· There have also been instances of local people paying bribes to the authorities to acquire a job card to receive the funds.
Blockchain — The solution
In such situations, Blockchain can help effectively implement government schemes. The data entry would be done on a distributed shared ledger rather than a centralized database. In the case of such schemes, the data entry of laborers applying for work along with their information on their identity cards should be done directly on the Blockchain. It could mitigate the risk of data manipulation, as data once entered, becomes tamper-proof and immutable. The smart contracts on Blockchain contain predefined terms and conditions to decide if the laborers are eligible for the scheme.
After entering the information of laborers, the smart contracts get executed and decide if the laborer is eligible for the scheme, and the result will be stored on the Blockchain. If the laborer is found eligible for the scheme, a notification will be sent to the central government, and the work will be allocated to the laborer. If work has been allocated to the laborer, then the smart contracts will release funds in the form of wages to the laborer’s account on the stipulated time based on the work completed by the laborer.
As per the scheme rules, if such employment cannot be provided to the laborer within 15 days of applying for work, the smart contracts will again be executed, and an unemployment allowance will be initiated to the bank account of these laborers. The higher authorities would be able to view the related information, for example, the number of days for which work is allocated for the laborers, the total budget of the work, funds allocated to the laborers, etc. Thus enabling a transparent flow of funds.
Even the social audit agencies, whose job is to scrutinize government operations, will be an essential part of this platform as they will have the authority to view the information updated on Blockchain by any authority at any level.
Further, the Blockchain technology will also ensure that people who are not in need should not avail such schemes by forging the documents. Similarly, government issues subsidies to people of its country — for instance, subsidies to farmers to purchase fertilizers for agricultural purposes. But because of the corruption involved, these subsidies are misused and sometimes do not reach the intended farmers at all.
Introducing Blockchain technology can provide transparency in issuing subsidies as well. It would ensure that the farmers or the targeted group of people are getting the appropriate and planned benefits.
Scalability concerns
(i) Blockchain used will be permissioned Blockchain. The stakeholders involved will be assigned specific functions on the smart contracts. Storing the entire data about the scheme, laborers, funds, authorities responsible for disbursing funds, etc., on Blockchain is very costly; thus, distributed file storage IPFS can provide low-cost off-chain storage to store this data. A unique hash is generated for every uploaded file on the IPFS server, which is then stored on the Blockchain and accessed through the smart contract. Any change in the uploaded file would change its hash. IPFS has been explained in detail in Part 18.
(ii) To make the Blockchain scalable and increase the speed of transactions, layer 1 (discussed in Part 15) and layer 2 (discussed in Part 16) scaling solutions will be required to be implemented.
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