Tamil Nadu on September 19 announced a blockchain policy as a “a guide for the path ahead” in using the technology in the state”. Blockchain, or distributed ledger technology, is a type of decentralised information architecture that records transactions in a permanent and verifiable way. The Tamil Nadu Blockchain Policy, 2020, was released alongside the Tamil Nadu Cyber Security Policy, 2020 and the Tamil Nadu Safe & Ethical Artificial Intelligence Policy, 2020.

The blockchain policy envisages that it will be used in delivering citizen-centric services, including healthcare and a “portable digital identity”. The policy lays emphasis on privacy and data security while praising the permanence and reliability of information on blockchain ledgers.

Summary

Introduction: Governments around the world and in India have planned to implement blockchain in governance due to the transparency and efficiency it brings about; the technology may be useful in land registration, healthcare, and digital identity. Tamil Nadu Chief Minister Edappady K. Palaniswami showed leadership in this area by announcing the Tamil Nadu State-wide Blockchain Backbone. Blockchain, however, should only be used when there are clear advantages in doing so.

Why blockchain in e-Governance? Blockchain as a technology is transparent, immutable, and interoperable. As such, it can be used in governments as a) a seamless inter-departmental data exchange mechanism with accountable, shared ledgers and smart contract enabled workflows to ensure data security and ownership; b) a source of authenticating and verifying government information and data; c) verify document authenticity by comparing with blockchain version, as this is less susceptible to being tampered with; and d) a tool for inter-departmental communication, better supply chains, and maintaining of health records, among other things.

Policy’s goals: The goals of this policy are to: a) make Tamil Nadu a global blockchain leader; b) improve government processes and service delivery using blockchain in order to bring in the benefits in accountability and efficiency discussed above; c) generate awareness on blockchain among senior Tamil Nadu officials; d) create a thriving ecosystem based on blockchain for entrepreneurs and communities in the state; and e) promote adoption of blockchain in Tamil Nadu across government as well as industry.

Objectives of the policy: The policy’s goals are to a) create a common set of guidelines to govern blockchain implementations across the Tamil Nadu Government to encourage interoperability; b) build a mature and self-sustaining blockchain community; c) build a regulatory sandbox for building and deploying blockchain applications; and d) create an oversight mechanism for a successful rollout, implementation and adoption of blockchain.

Applicability: The policy is applicable to a) any government body in Tamil Nadu, or any organisation that receives aid from the state government; b) cooperatives, trusts, societies, public sector undertakings and boards which are either run by the state government, or where the state government appoints office bearers; and c) partnerships and joint ventures with the state government.

Implementation strategy: The policy will be implemented by a) envisioning a “high-level design for building a common Blockchain Network” for e-governance projects, b) use case selection and prioritisation for blockchain (that is, determine which projects will use it); c) establish standards and guidelines for design, development and deployment of blockchain applications; d) create a plan to build capacity on blockchain among Tamil Nadu government officials; e) encourage cross-industry and cross-academia collaboration by creating a Forum for Blockchain Ecosystem Development, f) build a regulatory sandbox, and g) design an oversight mechanism for the blockchain policy.

Tamil Nadu State-wide Blockchain Backbone

The policy recommends the creation of a Blockchain Backbone (or network) for Tamil Nadu to “fun[c]tion as the single source of truth and trust anchor for all government processes and data.” This backbone will:

  • be a hybrid platform hosted either on state government servers or on the cloud, with participation from multiple stakeholders. It will be leveraged for Government-to-Government and Government-to-Citizen workflows.
  • be designed modularly to reduce the go-to-market time of applications.
  • be able to create and deploy blockchain applications for all government bodies and PSUs.
  • have its initial nodes be created and hosted by the Tamil Nadu e-Governance Agency, with a peer-to-peer network later created with government departments that will be tapping into it.
  • be built as a Blockchain-as-a-Service (BaaS) and support even those who don’t want to build a blockchain node of their own, by linking them with an Application Programming Interface (API) that will help them build applications more quickly. The government may charge users for accessing and submitting transactions.
  • only have data that is “cleaned” and de-duplicated beforehand.
  • provide access to third parties if required.

Use cases for blockchain in e-governance

The government would select and prioritise the following use cases for blockchain:

  • data integrity and audit trails for government documents and information.
  • securing academic records, degrees, diplomas, and certificates.
  • “Creating a portable digital identity and implementing privacy protection for residents of Tamil Nadu.”
  • securing Tamil Nadu government websites from unauthorised modifications.
  • Securing land registration and mutation transactions.
  • Tracking agricultural produce.
  • Creating a “secure healthcare platform that caters to all the residents of Tamil Nadu”.
  • Create platforms to distribute benefits.

Blockchain application guidelines

Having standards and guidelines (as discussed earlier) is essential for blockchain applications to be successful. To this end, the Tamil Nadu Blockchain Policy Implementation Committee, and the Protocols and Standards Committee and Legal & Regulatory Committee (both discussed in a section below), will do the following to ensure the “security, privacy and maturity” of blockchain applications.

  • Audit and create a list of approved blockchain platforms.
  • Chart out standards for consensus/ordering mechanisms, governance frameworks for networks, enterprise blockchain application development standards, privacy-preserving and consent management workflows, test cases pertaining to security, scalability and interoperability, identity and access controls management, securely storing and retrieving public and private keys, node on-boarding and off-boarding protocols, bug testing and reporting, smart contracts, arbitration workflows, archiving ledger data, and SOP for dismantling a blockchain network.
  • Create an SOP for evaluating requests for creating networks and developing applications.
  • Design and develop an interoperability protocol to enable blockchain networks to integrate with the backbone.
  • Regulate applications on the backbone periodically with sector-specific experts appointed.

The following guidelines are to be followed by government organisations and departments implementing blockchain:

  1. Get blockchain applications signed off from the committees.
  2. Submit technical details to the committees.
  3. Work only with peer-reviewed blockchain platforms. Cryptographic algorithms should not have security loopholes.
  4. Follow all standards prescribed by the committees.
  5. Protect privacy of citizen data by having access controls and consent seeking mechanism.
  6. Consensus/ordering mechanism should be in line with the committee’s guidelines.
  7. Networks should have clear rules for participation and access control, with clearly defined roles.
  8. Blockchain infrastructure should have clear network governance framework with rules for adding and removing participants.
  9. Implementations should list the categories of nodes like validating nodes. The node directory should be shared with the committees.
  10. Organisations should use a secure process for storing and retrieving keys.
  11. All networks and applications should be interoperable and compatible with the backbone.
  12. Applications need to comply with state and union laws.
  13. The architecture and components of an application should be kept confidential.
  14. Follow a mobile first strategy for greater inclusivity by supporting IVRS, SMS and other such channels.

Capacity building: In order to improve awareness among officials, the policy recommends: a) cross-department and cross-industry blockchain workshops in association with blockchain partners, b) short term events like boot camps, panel discussions and intra-department hackathons, and c) long term events like professional courses for government officials who need in-depth understanding of the issues, in collaboration with “knowledge partners”.

Forum for Blockchain Ecosystem Development: This forum should be setup for collaborations between industry, startups and academia. It should focus on a) providing a cross-industry blockchain tech platform by connecting different industry verticals with government, b) provide a forum for “exchange of ideas for making Tamil Nadu a global leader in blockchain technology”, and c) create a high level plan for evolving Tamil Nadu’s blockchain infrastructure with a focus on enabling private sector, startups and academia.

App development platform: The Tamil Nadu State-wide Blockchain would have “pluggable business modules” that can be installed on a node depending on a business use case. The modular architecture is, as discussed before, designed to reduce application development life cycles. Developers can access these modules via APIs and the policy recommends that the software development kit (SDK) for this be developed and distributed by the Tamil Nadu e-Governance Agency.

Regulatory sandbox: The policy recommends “a semi-regulated sandbox environment for building e-Governance applications using Blockchain.” Developers would thereby be able to “recreate live-like (sic) scenarios” for experimental purposes, so that policymakers can also benefit. The number of participants in the sandbox should be fixed, selected based on merit, and have pre-determined timelines.

Oversight mechanisms

As discussed above, two committees, the TN Blockchain Policy Implementation Committee, and the Protocols and Standards Committee, will be constituted. In addition, a Legal & Regulatory Committee should also be set up.

The first committee would be led by the TNeGA’s CEO, with other government participation. Its rules and responsibilities are to: a) ensure alignment with the policy, b) drive adoption of blockchain and the blockchain backbone across stakeholders, c) guide other committees on standards and guidelines, and d) define roadmap for the blockchain backbone and the end goals for each phase of development.

The second committee, the Protocols and Standards Committee, would: a) create a tech stack for developers, b) establish data sharing and privacy norms, c) design access controls for accessing backbone APIs, d) create best practices for designs and deployment, e) define a security policy for all TN blockchain applications, and f) create a governance framework for state-wide blockchain infrastructure.

Legal and Regulatory Committee: This committee would be responsible for:

  • studying and recommending how notarisation and authentication can happen through blockchain for use in courts of law.
  • defining a legal framework for dispute settlement and arbitration.
  • establish a data privacy policy for the ledger, and make sure no implementation violates a citizen’s right to privacy.

This committee should have representation from policy makers, technologists and the legal community.

Conclusion: The government looks forward to implementing the high-level plan outlined in the document within the e-governance system and implement it in other parts of the government too. The policy aims to strengthen Tamil Nadu’s blockchain prowess and deliver faster, more efficient and secure citizen-centric services.

This is a summary and does not necessarily reflect MediaNama’s views on the subjects discussed above.