Possible ways to reduce corruption and reduce black money

India’s battle against corruption has long been linked to the country’s high cash usage, with black money, bribery, and tax evasion thriving in an opaque cash-driven economy. A few recent incidents involving high level corruption has shaken the confidence of the citizens and unless some strong measures are taken, it will have negative impact on the morale of the citizen, confidence of the business community as also the global investors. Adopting a central bank digital currency (CBDC) and reducing the highest denomination to ₹100 can be potential game-changers. Digital transactions leave a trail, making illicit dealings harder, while lower denomination notes make hoarding cash and bribing large amounts impractical. The adoption of digital currency could bring enhanced transparency, as every transaction is recorded, making tax evasion and large cash-based bribes more difficult. Additionally, a ₹100 maximum note would make cash transactions cumbersome, discouraging bulk bribery and the storage of illicit wealth. However, challenges remain. While digital currency could improve financial oversight, concerns over cybersecurity, financial privacy, and the digital divide must be addressed, as millions still rely on cash for daily transactions. Similarly, eliminating high-value notes may push corruption towards alternative assets like gold, cryptocurrencies, and foreign currencies rather than eradicating it. Lessons from India’s 2016 demonetization suggest that while such measures can temporarily disrupt corruption, they do not fundamentally eliminate it. For lasting impact, these monetary changes must be paired with broader institutional reforms, including stronger anti-corruption laws, judicial efficiency, financial literacy, and governance transparency. The real fight against corruption lies in reducing bureaucratic red tape, strengthening enforcement agencies, and encouraging digital transactions in a way that is inclusive, secure, and efficient. While digital currency and a Rs.100 note cap could curb cash-based corruption, systemic reforms and stringent enforcement remain crucial to reducing corruption.

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Accelerate growth through tokenization and digitalization

Tokenization and digitalization are transformative technologies that can accelerate India’s economic growth. Using digital technologies like blockchain, physical assets can be converted into digital tokens, making them easier to manage, trade, and leverage.

Tokenization of land and property enhances liquidity and access to finance also enabling fractional ownership. Tokenizing land allows assets to be divided into smaller, tradable units, opening real estate investment to a broader population, including rural and semi-urban areas. It also increased liquidity as tokenized assets enable partial sales, unlocking tied-up capital and improving credit access for entrepreneurs. It also brings in transparency and trust in transactions by creating foolproof records. Blockchain creates a tamper-proof history of ownership, reducing disputes and corruption. Digital records minimize bureaucratic delays, making transactions more efficient. It also empowers rural and semi-urban communities as it formalizes land titles, enabling access to government support and financial products. Easier access to property assets supports local development projects and small businesses.
A few countries have success stories for us to emulate. The Swedish land registry tested blockchain for property transactions, enhancing transparency. In
Georgia blockchain-based land registries reduce fraud and disputes.

Apart from land, Indians also have large holdings of gold. Digitalization of gold
improves liquidity and market efficiency by converting physical gold into digital tokens for easier trading and enhancing liquidity. It also lower transaction costs by reducing expenses associated with storage, transport, and verification. It formalizes the market by shifting informal gold trading into the formal economy, improving tax compliance and security. Blockchain ensures secure and transparent transactions. It also supports economic growth. Digital gold attracts domestic and foreign investors. It connects with wallets and payment systems, strengthening India’s digital economy.

In Switzerland fintech firms offer secure, tokenized gold investments. UAE has Blockchain based gold trading platforms improve efficiency and attract investors. In India, GIFT City has started India’s first regulated tokenization platform enhances liquidity in real estate. AP’s Bhoomi project has initiated Blockchain-based land registry system, which ensures transparency and reduces fraud. MMTC-PAMP offers secure digital gold investments backed by physical gold. By adopting tokenization and digitalization, India can tackle liquidity constraints, improve transparency, and reduce inefficiencies in real estate and gold markets. These technologies can empower populations, integrate them into the formal financial system, and drive broader economic growth. Learning from successful international models, India can use these innovations as key pillars of its economic development strategy. hashtag#Tokenization,hashtag#Digitalization