Once upon a time, criminals had no borders. They would pick places at will and Hindi cinema would glorify them with lines like, “Don ki talash toh gyarah mulkon ki police kar rahi hai, lekin Don ko pakadna mushkil hi nahin, namumkin hai’’. The world was also a more interesting place before facial recognition technology was deployed. Now, across airports, bus-stations and traffic signals, cameras are ubiquitous.
Once everything is connected, this technology can identify people using any camera in the world. The technology is far more advanced than the people it caters to, making the possibility of a surveillance state not too far off in the future. Thus, it is the right time for the US Democratic lawmakers who introduced a bill that would ban the use of facial recognition technology by federal law enforcement agencies. But, do we need something similar in India?
According to reports, the US bill would make it illegal for any federal agency or official to “acquire, possess, access, or use” biometric surveillance technology in the US. Law enforcement agencies leverage and utilise facial recognition technology to identify victims and suspects by matching their photos and videos with pre-existing databases, such as driving license records and other markers of identity. But civil liberties groups have been raising concerns about facial recognition being prone to privacy erosion and reinforcing racial biases.
Lawmakers argue that technologies like facial recognition violate human rights and privacy and the discourse needs some intervention before we suffer a data breach and an unprecedented crisis.
DEMOCRATISING AI: A DOUBLE-EDGED SWORD?
The proposed law has arrived at a time when the use of facial recognition technology by law enforcement agencies came under major fire amid the protests against the killing of George Floyd in late May this year. Studies have repeatedly shown that facial recognition is less accurate for people of colour, specifically the Black community. The New York Times reported a similar incident wherein an innocent black man in Michigan was arrested due to misidentification by a facial recognition software.
The exact reason for the misidentification of darker-skinned people by facial recognition software is still unknown. One of the main factors is that the data being used to train algorithms is said to have a disproportionate number of white males as opposed to people of colour and women. Another reason for the misidentification by law enforcement agencies is that facial recognition software uses mugshots from criminal databases to find an exact match and the databases have a disproportionate number of people of colour, leading to false matches. The US criminal justice system functions with the aid of a computer programme for sentencing and granting bail. It has been observed by data scientists that the system is disproportionately unfair towards people of color. As reported by journalists Harry Armstrong and Jared Robert Keller in The Guardian, “In the US, criminal ‘risk assessments,’ based on predictive analytics, have already been shown to be biased against black individuals because the data used to build the system is inherently biased.”
AI is inherently unbiased and what it learns is purely based on the data we provide. So, we must be careful while preparing the dataset before training AI. Even in case of seemingly perfect data, there might be a bias, based on the features we ask the AI models to learn or pick from the dataset. So, it is critical to constantly analyse the results in order to improve the dataset. It is also important to put in place periodic updates and additions to the dataset as well as re-train the AI models.
From the Indian perspective, we should learn from the experiences of others and ensure that we do not repeat the same mistakes. If used correctly, AI can help improve people’s lives.
India’s judicial system is a textbook case of ‘justice delayed is justice denied’. It has a complex mix of problems. We have one of the most understaffed police forces in the world. Each state has its own police force that faces political pressures on a day-to-day basis and has to work with archaic laws and an infinitely long cycle of judicial hearings.
Deploying facial recognition technology will help the forces in critical areas. The central government has approved the implementation of Automated Facial Recognition System (AFRS). It will help police forces to search for criminals and missing and dead people from a nationwide database.
In our country, there is no precedent of law enforcement agencies being biased towards darker-skinned people. However, there are different parameters for discrimination in our police forces, based on caste, economic status and, sometimes, religion. Therefore, the bias of a facial recognition system for darker-skinned people is not relevant to India. But, the threat of a privacy breach and this powerful tool being misused still remains, which is why we need very strong laws to protect our citizens.
REVAMPING POLICY FRAMEWORKS
Independent data regulators should build a progressive data regime. The right steps to protect the data and its misuse need to be taken. At present, there are seven international agreements and standards centred on data privacy, out of which, five require the establishment of an independent supervisory authority. The Organisation for Economic Co-operation and Development (OECD) Principles do not stress on the need for an independent supervisory authority. However, with the Europe model, both the GDPR (previously Directive 1995) and the Convention 108 of the Council of Europe i.e. 90% of countries with data protection laws have opted for this model.
India introduced the Personal Data Protection Bill in December 2019. It is a thorough document covering most of our concerns. Currently, the bill is still under review by the committee and stakeholders. If it gets slated for early next year, we can have an ombudsman of data in place, at the earliest.
The bill has provisions to exempt government agencies from the bill in certain circumstances involving national security, in accordance with the procedures established by the law. These are a few grey areas we must be cautious about and make sure that the laws are put in place keeping in mind both the privacy of people and the security of our nation.
THE WAY FORWARD
In both the Indian and global contexts, we need to ensure that facial recognition technology is used ethically and does not violate the privacy of end-users. General consensus among the public is mixed. For instance, the Bangalore airport is implementing face recognition based on boarding passes and not facing any repercussions since its use is restricted to the airport with a choice to opt-in or out of it. The government promotes CCTV camera usage in public places for safety purposes and the reaction of the public is generally positive towards it too. In fact, in all such areas, it is repeatedly announced that people are under CCTV surveillance.
Before introducing a new technology that will redefine how our law enforcement agencies function, due diligence should be done. Transparency in acquiring data and its uses will help the general public understand how facial recognition is helping to create a safer society. There should be open debates about the threats along with the benefits such a system brings to our police force. Rules and regulations around the use of technology should go through proper channels.
Biometric data has simplified life for several people across the country. To minimise the misuse of facial recognition, it should be under the control of a single government body which should be made answerable. It would also reduce the blame game in case of a breach and make the process of finding loopholes easier. The state agencies should work with central agencies to use the resources available, where predefined quotas will help remove discrepancies between the usage among different state agencies.
Meanwhile, the starting point could be a system like the face recognition-based boarding pass at BIAL, where the public can decide if they want to opt into the system or not, just like the option to lock or unlock Aadhaar details and biometrics.
Facial recognition is a very powerful tool that can reform law enforcing processes in India. It will help locate criminals in a short duration, making the society a safer place. Eventually, cameras will identify all criminals and no ‘don’ will ever be able to make his boastful statements ever again.
The writer is CEO and co-founder of Integration Wizards Solutions.
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Need for family offices to work together under a co-investment structure: Jahnavi Kumari Mewar
Jahnavi Kumari Mewar recently joined NewsX for an exclusive conversation as part of NewsX India A-List. In the exclusive conversation, she spoke to us about her business firm along with insights on internationalism, effective global governance practices and the way forward for the post-Covid world.
Jahnavi commenced her talk by speaking about the creation of Auctus Fora and its uniqueness. She said “Auctus fora was born with a need to work with family offices (preferably) without a fund structure in place. If I take a small step back, I initially worked for JP Morgan from where I decided to set up a boutique investment bank and as that business developed and progressed, I had developed very meaningful relationships with family offices globally. We found that there was significant need for family offices to work together under a co-investment structure rather than that of a fund. Moving on we decided to set-up a co-investment platform, entirety focused on private acuity and private structure credit working with family offices globally. It’s a unique model because we work on ‘reverse origination methodology’ developed in 2011. We use this methodology to make investment decisions and direct our investment philosophy.”
When asked about how pandemic months have been for her and her firm, she responded “I think based on facts that firstly we are directed to asset. Number 2, we don’t do listed securities and are a private acuity focused and private structure credit which organically give you a lot more control over your investment decisions. I am very rigid when it comes to investment decision making process. For example – we’ll never chase dues or get into a bidding war as I believe that if you get your buying price wrong then you already made a big mistake in terms of capital allocation and investment process. In such disruptive times when others have faced upheavals, we have ramped up because of our decent decision making. Based on that what we have done over the past 15 months is that the assets which we felt will continue to give long term returns and are relatively resilient to the disruptions caused by global pandemic and lockdown, we have reinvested capital or added additional capital into those assets and portfolios. So, at a macro level we have reinvested capital into our portfolios and at micro level, into select asset portfolios. I mean not to say that we haven’t felt pain but we have been more resilient.”
Explaining the post-Covid global economic changes, she expressed “What we are seeing globally is unprecedented crisis for which a lot of nations have lacked institutional memory because they have never experienced something like this before. In the absence of institutional memory there is institutional unpreparedness. I think that responsibility and accountability of this crisis doesn’t solely sit with the current government because there has been decades of under-investment in the public healthcare infrastructure. Instead the present government has put concentrated efforts towards formulating new public policies. It is my personal opinion that unfortunately the government lacks sophistication in its policy making. Therefore they come across significant opposition to their policies.”
When it comes to changing global supply chains, Jahnavi described “let’s look at global supply chains from both political and economic perspectives. Politically speaking, we have fallen short on collective action and there has been a crisis of global governance. Supply chains and global governance can work hand in hand. A good small scale example is of QUAD members who have been working together and have been multilaterally more effective. So when we talk of re – engineering global supply chains, we have to look at from the perspective that are we going to create an incentivising engagement that affects better global governance practices.”
Lastly speaking about the importance of institutions like QUAD as representative of the changed world over institutions like UN and WHO, she said “QUAD is a great example of a force for global good. WHO has been less effective than QUAD as it has been dispersing contradictory information globally, it along with UN have failed to garner collective action for a global solution to the pandemic. QUAD is representation of way forward. We need to re-engineer a pragmatic form of internationalism which meets the needs for today and future.”
‘Lasting impact will come from an aware and educated community’: Sanjana Sanghi & Sudarshan Suchi
COVID-warriors, a term which in the pandemic year, has given many, power to fight the unseen enemy, i.e, the novel coronavirus, and many, the drive and motivation to step up and contribute to society. Unlike the front-line warriors such as doctors, nurses, police, and the medical staff, the COVID-warriors can be anyone who feels that humanity needs to be kept alive and robust at tough times like these. NewsX’s special series, NewsX A-List, proudly hosted two such warriors. Save The Children is an organisation that focuses on dealing with the plight of the children in the pandemic. Sanjana Sanghi, a well-known actress, and Sudarshan Suchi, the CEO of Save The Children, are working vehemently for this noble cause.
Sanjana Sanghi, on the motivation and drive to work with the organisation, said, “I have been working with children in the areas of education and empowerment since I was a student at Delhi University in 2014. I saw people coming up with various resources to help each other during the pandemic, but the scenario was seen only in the cities. The remote areas and the hinterlands were being neglected, not consciously, but by how things were panning out. Save The Children are doing an incredible work where they tap into aspects that people don’t even know exist.”
Sudarshan Suchi, CEO, Save The Children, elaborating on how the pandemic is impacting children, said, “The list runs long. Even though the disease, in particular, did not impact the children, but everything around it has hit them. Whatever could go wrong is going wrong with vulnerable children – who live on the brink of society – their caregivers are weak in terms of livelihood, security, and network. Child safeguarding became a big issue. The school was a big source of nutrition through the mid-day meal is no longer functional.” Sudarshan also highlighted the lack of space for the children living in slum areas who cannot follow the social distancing norms, even if they want to. He gave an example of a girl from Kolkata whose parents got infected, and the only idea of quarantine was that the whole family had to move out. “The whole family started getting ostracized due to the lack of basic facilities like water,” said Mr. Suchi.
Explaining the mechanism of their organisation, Sudarshan said, “Our efforts have been three-fold. Firstly, we try to be aware of any kind of distress calls from our community mobilisers and others. We ensure that they get safe health care. Secondly, we have been working with communities to build their capacities around the knowledge of COVID and hygiene. Thirdly, we are also focusing on the continuity of nutrition and education of the children who are not able to cope up with this extraordinary situation.” The digital gap is glaring and worrying since everything has switched to online. Save The Children is working against reducing this digital gap. “I would rate the time and engagement with the children far higher than any support,” he added.
Sanjana is also working very passionately with the organisation at the forefront. Stressing on the need for education for children, she said, “The effects of the pandemic are both short-term and long-term. The long-term effects of the pandemic will impact the nation at large. The children’s right to personality development, sense of self, dignity, and the right to learn is being taken away from them due to lack of infrastructure. To interweave digital learning into the learning process in such areas is a huge challenge. We are especially focusing on the girl-child as they experience greater neglect.” Sanjana has been associated with such works “deeply.” Starting from a teacher volunteer in a small NGO, she realised the value of her education for hundreds of underprivileged children. “Being a nerd also helped me realise the importance of education,” she said. She has been associated with multiple organisations in the past.
Sudarshan Sanghi appreciated the efforts made by Sanjana and told how she chased the organisation to play the right-front role for the cause, unlike other public figures who the organisations run behind to get more reach. Discussing his aspiration from the road ahead and the future of India, he said, “Ultimately lasting impact will come from an aware and educated community. We are focusing on helping the government help deliver help efficiently. We are also building a team of pediatricians who can deconstruct the implication of pandemic on children and get insights on how to take care of them.” Mr. Sanghi ended with discussing a three-prone approach which involved short-term – Survival, middle-term – Education and Continuity, and long-term – Future Employment and preparing children for the changes. He also stated that across all dimensions and one of the top agendas is Mental Health of the Children.
‘People are more aware of the quality of products after Covid’: Ashish Khandelwal
Ashish Khandelwal joined NewsX for an exclusive conversation this week for its special segment NewsX India A-List. Speaking about the company, Mr. Ashish spoke about how the company was formed in 1999 and was made by his forefathers. Having been the business for the past 75 years, Bl Agro Industries Limited has created a niche for itself.
When asked about the reason behind the entry into kitchen ready products, he said, “Basically for diversification, we started it. We are doing distribution and all the customers and retailers ask for quality products. So we decided why not move forward with diversification and move into food products.”
Talking about the response gained for the product, he said, “Just after the launch, Covid-19 started. It started in January, 2020. The journey has not been very long. We faced lockdown. Moving forward, we will hit our targets.” After Covid hit, kitchen ready products became one of the most searched productions and most of the people started exploring various option. Talking about this, he said,“We got a good push in delivery because of this. Otherwise, a new product introduction during lockdown would have been tough.”
When asked about the existing market and new markets in India, he said, “Right now, we are in northern parts like Delhi, Uttar Pradesh, Haryana, Uttaranchal, Bihar, etc. and we are permanent here. In a couple of months, we are moving to the South.” Stressing on the company’s new marketing strategy, he added, “We are always after distribution. We try to maintain relations with distributors. So, companies provide all sales staff and everything. The sales staff gathers all the market reports and demands and then we work on it. The more prominent and convenient strategy is retailing nowadays because nobody is moving out and going to market and all. Today, Covid problem is for retailers to move out. So we are trying to maintain our market. We recently started our online portal. Soon it will be fully functional.”
Most people are used to bigger platforms like Amazon but small companies have also curated their apps, which shows whatever product available. Bl Agro Industries Limited has the same plan. He says, “Definitely, we are launching an app. We will be available side-by-side with the sites and all. From the first of July, we are trying to fulfil the desire of the customers.”
“We are thinking about expansion typically in pulses, flowers and all. In India, it has not been innovated. There are not many innovations and all. So we have tried to introduce some machines and all. Right now, we are grinding it with the stone mill which was modernized and from Austria. We have started vacuum packaging of pulses and food items. Nobody in India does vacuum packs for pulses. Similarly, we try to procure more specific machines and all and try to give more flavours and more specific aromas and the best quality we can provide,” he added.
Ashish expressed, “After Covid, people are more aware of the quality of products. They are more concerned about the quality. So we are trying to produce good and better things today. We don’t have such competitions and we are focusing on Indian pulses.” When asked about organic chains, he said, “Right now, we are not planning for organic because organic has lost its quality as every brand is producing organic products. Specifically, we don’t have any tests for organic. That is the problem when we say organic, it needs a specific amount of time. It takes 7 years for an organic crop to come and is financially not feasible.”
Education is the third eye of a child: Prof (Dr.) Achyuta Samanta
NewsX recently interacted with KIIT and KISS founder Prof (Dr.) Achyuta Samanta as part of its special series NewsX India A-List, wherein he talks about his journey as an entrepreneur and social worker. Speaking about the initial stages of start-up, Prof Achyuta said, “Now the word start-up is very much familiar with everybody. It is very popular. And all the young masses are generally starting something in the name and style of a start-up. But practically when we started, there was no word like a start-up. But I am very much happy that we have started from scratch. With Rs. 5000 in my pocket in those days, in a two-rented house, in two organisations. Both organisations have come up like anything and earned World appreciation.”
He added “The Kalinga Institute of Technology (KIIT) is one of the most promising universities in the World. In the league of eminence, recognised by the government of India along with nine other universities, with 30,000 students present in the campus from Pan India and from the 65 countries, with one lakh alumni students from the KIIT University. Besides spreading over 25000 square kilometres of the area with 1.5 crores square foot built up in 25 campuses. This university’s aim is humanity and compassion. At the same time, I started the Kalinga Institute of Social Science(KISS). Now it is home for poor tribal children.”
When asked about reason or the idea behind starting it, Prof Achyuta said, “Idea is very simple. Only the wearer knows where the shoe pinches. As Achyuta Samanta was born and brought up in those days amid severe poverty. Achyuta Samanta was so poor after losing his father at the age of four with other six brothers and sisters and mother. Achyuta Samanta himself was not getting even one square meal or two pieces of roti in one day. So that type of poverty, hunger Achyuta Samanta was experiencing from the age of four. I had this experience on how poverty and hunger kill everything. I used to say education is the third eye of a child. Education is the tool of everything. If one is educated or given education, all the problems will be taken care of. Achyuta Samanta himself is the best example before the World. Unless and until I am educated a little bit, I will not have been the instrument to give this smiling face to millions of children. This is the reason I started the Kalinga Institute of Social Sciences. It is also the first-ever tribal university in the entire world and it is fully residential.”
Talking about his village, he said, “As a social worker and entrepreneur I work for the people. I developed my native village into a smart village giving all city amenities in that village. Also, the entire Panchayath is known as the model panchayat and that village is a smart village. Everything is available there.” He added, “If someone wants to manage things he or she can do it. I have been working 17-18 hours per day for the last 29 years without taking single daybreak. “
Talking about the work he does for women empowerment, he said, “I know from my childhood, the more we respect women, the more prosperity we get. From my childhood, I’ve been respecting women. Women are the real source of inspiration. In the last 20 years, countries are prospering because women are on par with men. There is one scheme- the Kalinga Fellowship for empowering women.”
Emphasising his organisation’s efforts towards Covid relief, he said, “It is such a challenging time for everybody and we have been with people during every calamity. During the pandemic, I’ve been happy to help people. We have been running four Covid hospitals. We have been dropping 10 kg of dry food at the doorstep of every child for the last 15 months. We have announced if any faculty dies, children will be given free education. In the meantime I’ve been taking care of 100 orphans and once the pandemic ends they will be given good education till they are adults. These are some of the good things that we are doing.”
GLAD THAT I LISTENED TO MY INSTINCTS: TANUJ VIRWANI
Tanuj Virwani, who has won a lot of accolades for his role in ‘The Tattoo Murders’, recently joined NewsX for an exclusive interview as part of NewsX India A-List and opened up about his current projects and how the pandemic has been affecting him.
Tanuj Virwani is an actor and model, who has won a lot of accolades for his role in ‘The Tattoo Murders’ on Disney+Hotstar, and yet again he packed with a powerful role as ACP Aditya in ‘Murder Meri Jaan’ streaming on Disney + Hotstar alongside Barkha Singh. Along with being an actor he has shown a keen interest in direction and writing and has made several socially relevant short films. Tanuj recently joined NewsX for an exclusive interview as part of NewsX India A-List and talked about how his current projects and roles in it and how the pandemic has been affecting him.
When asked about what convinced the director and also him to do the role in his recent film ‘Tattoo Murders’, Tanuj shared with us, “If you propose that question in front of our director Shravan sir maybe he will ask what convinced Tanuj to do the role. It was sort of a perfect role because I think I was also itching to do something different. Since I have started getting work, I have been offered an array of roles such as after ‘Inside Edge’ I have been offered interesting projects. It was more urban in the treatment of how those characters lived, and I specifically felt that with the character of Prabhat Pratap on ‘Tattoo Murders’, it offered me the chance to do something drastically different and I like to experiment.”
“On this particular project, I did not have the sort of pressure to carry a shoot but I was okay to try something different because sometimes you will pass with flying colours and audience will embrace it or sometimes just mixed reactions. But if you don’t try, if you don’t take that first step into the water you will never know whether you can sink or swim. I think the OTT platform also largely should be credited because it really gives us as actors a lot more scope for experimentation, shoots and even films.”
When asked about how appealing the role was to him, the actor replied, “Absolutely, the one thing I am happy having seen the show entirely is that our director who is also one of the writers on the show was kind of able to read it in the authenticity that was present in the writing. Many times what happens is that things get lost in translation, you might read a script and whereas the whole story may appeal to you but when you see the way it’s finally done on the screen executed very differently. In this particular case, I feel Shravan sir has done an excellent job of maintaining the authenticity and it’s very raw and very edgy because there’s no sex involved in a lot of projects was involved shooting in real life which I think will be impossible during a pandemic but we finished shooting just before Covid has hit.”
When asked about his success with digital platforms, Tanuj said, “I think just the visibility of what OTT platform offers to actors like myself and many others in my position is insane. I still remember when I was signed on ‘Inside Edge’ and we were shooting back in 2016, a lot of us were very cautiously optimistic that we know we are making something cool and interesting but no one could have in their wildest dreams thought like the impact it could have. Today when you look at the entire landscape of entertainment in our country it has just shifted so dramatically and has given birth to so many wonderful actors and I consider myself very fortunate that I am an active actor at this point of my career who is getting these opportunities. I am just so glad that I listened to my instincts and it has given me even more confidence on going ahead to trust my instincts.”
While talking about his next upcoming movie, the actor shared with us and said, “The lineup seems to be very solid right now so I believe my next release would be a show called ‘Tandoor’ that is based on a Tandoor murder case that happened in Delhi in 1995 and I am portraying the role of the person who was responsible for it and it’s a miracle to get that on Covid situation. I have got another show coming up with Barkha Singh so I am looking forward to it as it has given me another opportunity to do other works. There is one upcoming project which I am passionate about with the mafia in Bombay city because it’s again a very different kind of project.”
When asked how the actor himself has adjusted to the pandemic situation, Tanuj revealed, “Everybody collectively put our guards down and we are in a probably worst situation than from last year. I would like to say is that we all have been redirecting for the last year about social distancing, sanitisation and wearing masks and hence I request viewers to take of themselves and others around especially those who are vulnerable. It has been frustrating for me also but whenever I put on television I consider myself extremely fortunate and grateful to be in the position that I am and there is so much to look forward to in life and I am sure few years from now when we will look back at this as learning curve thinking and how we lived through it and we survived.”
Cryptocurrencies: Regulation is the constructive way forward
Is the wave of cryptocurrency a destructive tsunami that shall annihilate the financial system or a lucrative opportunity that ought to be pushed towards profitable shores? Given that the first cryptocurrency, bitcoin, traded at $0.08 when it was created in 2009, even after accounting for its significant fluctuations, its current value of $35,876, is enough to make jaws drop and eyes roll.
What makes cryptocurrency so valuable despite it having no intrinsic value? Top cryptocurrencies such as Ethereum and Bitcoin trade at amounts that are unthinkable for an intangible piece of code. While this can be baffling, on deeper scrutiny, print money’s valuation is equally without any intrinsic value. Once the gold standard was removed in the 1930s as a basis to value fiat currency, the central bank of a country was effectively the sole determinator of its value. So the RBI dictates the value of the Rupee and if it decides to devalue it against the dollar or print more money, it can easily do so. However, there is still a level of stability associated with the value of the rupee owing to several factors on the demand and the centralised nature of its regulation, as is true of most fiat currency from stable economies. On the other hand, it begs the question of whether a currency whose value can fluctuate from $58,000 to $30,000 on an Elon Musk tweet can be said to have any level of stability.
The value of cryptocurrency is derived from demand and supply, media forecasts and finite coin mining. Being platformed on blockchain technology and a decentralised distributed ledger system it has no central authority which approves and maintains a record of the database and determines its value. Despite the banking system being one of the oldest institutions backed by the Central government, the absence of an intermediary has not stalled the growth of cryptocurrencies because it has developed on a peer to peer network, being freely tradable by individuals and vesting control directly into the hands of the owner. Its convertibility into fiat currency is also at the behest of individuals who, through exchanges, are perfectly happy accepting it as tender which constitutes a discharge of debt.
Moving forward, there is great uncertainty about the place of cryptocurrencies in the formal economy on account of the concerns of the state-regulated banking system. Lately, the Chinese government, amongst others, has vowed to crackdown on crypto-exchanges amidst growing leakages from their financial system. El Salvador, in stark contrast, became the first country to formally introduce cryptocurrency in its financial system and recognise it as legal tender. Several countries stand between these two extremes and recognise cryptocurrency in a limited capacity by regulating its use. India is at such an inflection point and must decide which path to follow.
As with most significant technological developments, India viewed cryptocurrency with scepticism but did little about it from 2008 till sometime in 2018, when the RBI decided to come out with a circular that disallowed banks from allowing persons to trade in cryptocurrency. That step was taken without the legislature disallowing trade in cryptocurrency, so it effectively never made cryptocurrency illegal but created a surrogate ban for its official trade. The result was cryptocurrency exchanges relocating themselves outside of India and those wanting to trade in cryptocurrency proceeding to do it from outside the country. The RBI’s circular was struck down by the Supreme Court in its judgment in Internet and Mobile Association of India v RBI, which meant that crypto-currency, never considered illegal in India, could be traded and conversions into fiat currency done through the formal banking channel. However, as with most things, matters did not end with the Supreme Court’s decision. The recent experience with cross border trade in cryptocurrency in violation of foreign exchange guidelines served as another important reminder that regulation, and not prohibition, is the way forward. The cryptocurrency exchange WazirX was put on notice by the Enforcement Directorate for the alleged violation of foreign exchange laws.
Rather than a blanket or a surrogate ban, acknowledging that the Indian authorities are well within their rights to prosecute the unauthorised and illegal use of cryptocurrency is the way to serve all stakeholders and is better in the long run, even from a tax collection standpoint. Allowing interested traders to access the market through legitimate and regulated means would help negate many of the worries associated with cryptocurrency transactions. Banning cryptocurrency is likely to further incentivise investment through the black market thereby leading to even more leakages from the formal economy.
India can take several cues from beyond its borders on how to approach the regulation of cryptocurrency. The European Union, while cautioning against the dangers of cryptocurrencies, has permitted its use by regulating it. Cryptocurrency trading is also permitted in the USA, UK, Canada, Brazil and Russia, amongst others. For example, in the USA, people who trade in cryptocurrencies must follow centralised regulations and must register with accredited bodies to enforce anti-money laundering programs, keep appropriate records and make reports to FinCEN. With the active monitoring of such reports, it is possible to regulate the entire market holistically to avoid funding criminal activities such as terrorism.
With carefully crafted safeguards most of these concerns can be tamed. The potential for cryptocurrencies to destabilise the system can be addressed by simple checks such as permitting trading only through exchanges and limiting deposits and withdrawals. By placing limits on the volume of sales and purchases as a percentage of the total holding, the volatility can be controlled in the same manner as the stock market. That said, while there have been talks of cryptocurrency regulation in India and several policy papers, they have not materialised into a proper regulation. A bill in Parliament proposes criminal penalties for mining, holding, selling, trading, issuance, disposal, or use of cryptocurrency and at the same time introduces the Digital Rupee as the RBI backed digital currency. However, that was followed by a ministerial press statement that suggested that even if the bill was tabled for the RBI to launch a Digital Rupee, it would not criminalise cryptocurrency. That bill is yet to be tabled. Further, high echelons of the government and in particular the Finance Ministry have made positive statements to the media on the subject, which shines a bright ray of hope, but not without the usual policy surprises.
The question is whether India wants to follow China or embrace the winds of change with strong controls that are in sync with the liberal free-market economy. By embracing new technologies in our democratic and progressive nation, the twin objective of strengthening the dream of a digital India and not missing on the Blockchain revolution will become a reality. Gautam Buddha’s adage holds true even in today’s world: “Change is never painful, only resistance is.” There is no reason for India to impose a complete ban. Appropriate regulation and taxation are the tools to introduce it within the system for safe and legal use.
Nakul Dewan is a Senior Advocate, Supreme Court of India and Barrister, Twenty Essex, Singapore and London. Nakul was the lead counsel who successfully argued against the RBI’s cryptocurrency ban in Internet and Mobile Association of India v RBI. Avishkar Singhvi is an Independent Advocate, Supreme Court of India. The views expressed are personal.
By embracing new technologies in our democratic and progressive nation, the twin objective of strengthening the dream of a digital India and not missing on the Blockchain revolution will become a reality. Gautam Buddha’s adage holds true even in today’s world: “Change is never painful, only resistance is.” There is no reason for India to impose a complete ban on cryptocurrency. Appropriate regulation and taxation are the tools to introduce it within the system for safe and legal use.
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