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Karnataka government working on blockchain platform for e-procurement

Decentralised blockchain networks are rapidly emerging as a fix that could keep out public corruption, among other reasons.

The Karnataka government is developing a permission-based blockchain network that is intended to work as a decentralised trust and efficiency layer for all e-Government Procurement (e-GP) systems across the country, according to a press release.

In this regard, an IIT-Kanpur-backed startup CRUBN has partnered with the Karnataka government’s Centre for Smart Governance. In brief, according to the release, the proposed blockchain network will —

  • Be used for validating claims of suppliers along with their identities.
  • Connect all e-GP systems through a network, which will help retrieve and validate relevant supplier data between various e-GP systems that are in use within India.
  • Digitise bank guarantees by powering them using blockchain. “Tokenisation of bank guarantees would mean that they will become a more acceptable instrument of transaction than they are now,” the release read.

MediaNama has reached out to Abhay Karandikar, Director of IIT Kanpur, for more clarifications about this blockchain proposal. The report will be updated when we receive a response.

The poor security of existing e-procurement portals has increasingly come under the scanner. In 2019, a hacker allegedly tried to steal Rs 46 crore from the Karnataka government’s e-procurement cell and succeeded in stealing Rs 11.5 crore, according to an Economic Times report.

Blockchain terms and conditions to be decided by consortium

According to the release —

  • The blockchain network will be governed by the terms and conditions decided by the consortium of e-GP systems across the country.
  • The blockchain system can be used as the national de-duplicated supplier data store.

How will blockchain help in e-procurement? “Any e-GP system can depend upon the trust that Blockchain guarantees to authenticate supplier details. This will potentially save enormous costs associated with tender processing and make the process simpler and efficient,” the release said.

The World Economic Forum, in a paper titled “How governments can leverage policy and blockchain technology to stunt public corruption”, said that blockchain enables —

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  • Permanent and tamper-evident record keeping
  • Real-time transparency and auditability
  • Automated smart contracts

Blockchain makes it more difficult to remove records of bids and public comments, or to alter bid or tender offers once submitted. This decentralizes decision-making, oversight and record-keeping, enhances transparency and devolves power away from authorities who might be prone to corruption — World Economic Forum

Karnataka’s bitcoin scam bites back

A 26-year-old hacker, Srikrishna Ramesh, who allegedly infiltrated Karnataka’s e-procurement portal is also the prime accused in a bitcoin scam that the Bengaluru Cyber Crime Police stumbled on during investigations in a drugs case in 2020, according to a report by The Print.

The scam has possible political ramifications and has put the state’s Basavaraj Bommai-led BJP government in the spotlight. “There is information about the involvement of influential politicians of Karnataka in Drugs & Bitcoin scam. It is concerning that the investigating officers are trying to close the case to help those politicians. @BJP4India govt should not use their power to divert the investigation. They should ensure that the guilty is punished,” Congress party leader Siddaramaiah tweeted.

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Among other subjects, I cover the increasing usage of emerging technologies, especially for surveillance in India

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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