India intends to facilitate blockchain tech, not hurt it: FM

Union finance minister Nirmala Sitharaman, speaking at Stanford University in the U.S., said the government’s intention is not to hurt technologies like blockchain but to facilitate them. On India's policy position on crypto, Sitharaman said India recognises there’s a lot of potential in the technology, and a lot of progress has been made in the distributed ledger tech.

“Blockchain technology is full of potential, not just in a payment arena but also in many others. Our intention is in no way to hurt these but to define how we need them & in what ways their growth should be facilitated,” says Sitharaman, who is on an official visit to the U.S. since April 18.

She said because as much as potential it has, which can be positive for the economy, it also can be manipulated for “not so desirable ends”. “Whether its money laundering, which can lead towards financing terror, these are concerns. Not just in India but in many countries,” says she, adding that all global organisations are studying the impacts of blockchain technology and cryptos.

On the current situation in war-torn Ukraine and sanctions imposed by the West, the FM said sanctions always have an impact, not just on the country where these are imposed but on other countries as well. “That's the situation now because we are inter-connected. This is a great lot of advantages. That should be built on. But, it also brings a lot of unintended consequences. So because payments are impacted because of the SWIFT payment system ban, it can have an impact on many others. Unintended consequences do bear an immediate and strong impact on countries in this digitally connected world," she adds.

She added that unintended consequences may have to be factored in future before imposing such sanctions.

On India’s position on Ukraine, the FM said India's position is not just for economic interests but also for security interests. “The balanced approach that India has taken is very much because of the geopolitical location of India as we share land borders with some of these countries. Over the decades, India had to defend itself when situations arose against its land and border interests. Almost left to itself. India definitely remembers those instances. But in current situations of globally-connected worlds, remembering isn't enough, you'll have to work as per the current situation. So we are conscious,” she adds.

The FM also discussed the issue of rising inflation across the world. “In this connected world, inflation spreads faster, quicker, wider and deeper. This time around, inflation is not going to because the Fed takes a decision to regulate its economy, and ensure that the rate of interest is increased, which is low for a long time, but because globally, there are a lot of dollar bills. So when you are global currency, you also immediately leave imprints with each one of your decisions all over the world.”

The FM said this issue alone is not going to be the cause of inflation. The inflation now is going to be, largely, because of commodity prices. “Because of the essential commodities prices, even foodgrains are becoming dearer. Ukraine, which is a large supplier of wheat and edible oil, is now in disarray. That’s the space left wide open. Not many countries produce these in large quality so that they can fill it, though India is sitting on a large stockpile of wheat and we want to exploit them,” she adds.

She also said amid this, crude oil prices are not coming down, and that level is going to heat up so many economies. “India imports 85% of crude it consumes and of it, 80% comes from the middle east, 5-7% from the US, and 3-4% comes from Russia,” she says, adding that with prices remaining high, supply constraints, inclusive of natural gas, will hurt economies.

The FM also spoke about public bank mergers, saying it’s a “good step forward”. “India needs a lot more big size banks to deal with scaling up of issues in various sectors like energy, logistics, infrastructure funding. Bank merger is also meeting up with the standards of regulation,” she adds.