Hi! Everyone and wishing all very Happy New Year. Today I am going to discuss- How Bitcoin Adoption Will Help India Achieve Its $5 Trillion Economy. India has been one of the most notable emerging economies in the world in the last few decades. It currently stands at seventh place with a nominal GDP of $2.72 trillion. And it is expected to overtake the United Kingdom in the years to come. India’s PM Narendra Modi envisioned a dream of making India a $5 trillion economy by 2024. If you consider the current economic performance. Then it might be a challenge to achieve that dream for a country with a population. Indeed, bitcoin adoption in India could be the key to its economic future.
India’s Current State
India’s GDP is to reach $5 trillion by 2025. Its minimum annual growth rate will need to be greater than 10.8 percent every year. The current growth has fallen sharply from 8 percent last year to 5 percent in the second quarter of 2019. Manufacturing growth in India slumped to a 15-month low in August. Due to lower sales growth, resulting in factories being forced to shut down production.
Another reason for slowing economic growth in India’s rising unemployment rate. Which was 8.5 percent in October. Its highest in the last three years. Foreign portfolio investors were net sellers of Indian stocks during the July-September quarter. And withdrawing over $3.2 billion from Indian capital markets. The Central government’s fiscal deficit is projected to widen to about 3.7 percent in FY20. Contrary to the plan of keeping it under 3.3 percent.
With all these lower-than-expected results, the Indian government has been taking a series of measures to boost the economy from the supply-side. By pushing public capital expenditures, lowering the corporate tax from 35 percent to 25 percent. Moreover, India’s central bank, the Reserve Bank of India (RBI) has cut its interest rate five times since the start of 2019 to boost spending.
Back in 1991, India adopted economic liberalization which helped to expand its economy. And its role in private investment. Due to this radical reform, India achieved the status of a developing country. But failed to adopt similar reforms that would have propelled it toward becoming fully developed. What the government could do is adopt measures to stir the economy in an upward direction. Also, focus on opening the doors to supplement growth. Right now, India has a chance to live up to this potential by adopting another radical monetary innovation: Bitcoin.
Bitcoin is the world’s most powerful monetary innovation. With an idea to democratize exchange/store of value. So, without any control from a single authority. Eleven years after its birth, it has been the best-performing asset class. And most importantly, is on its way from being merely collectible to achieving the status of digital gold in years to come. Recently, Bitcoin’s hash rate just hit an all-time high of 111 EH/s. Restoring confidence in its network despite the price dump. Every day (or, more precisely, every 10 minutes) as Bitcoin’s network becomes stronger than before. It will absorb more monetary value in proportion.
The important is that the rise in bitcoin’s monetary value will have a significant impact on India’s fiat currencies. Countries with the weakest monetary policies. And currencies are most at risk of economic failure at the outset. Once they begin to fall, a domino effect of all fiat currencies that adopted the wrong monetary policy and engaged in excessive money printing will follow. This threat to fiat currencies is a large part of the reason. Why governments all around the world are hesitant toward directly adopting bitcoin. But governments should view bitcoin not as a threat but as an opportunity.
Bitcoin As New Standard
Long before bitcoin, gold was considered a robust store of value. In 1944, 44 countries signed onto the Bretton Woods system. Agreeing to peg their currencies to the U.S. dollar (which was, itself, declared to be backed by gold). Due to this structure and overall confidence in its economy. The USA achieved the status of the superpower in decades to come. The same sort of robust growth could be achieved by India through bitcoin adoption.
First, India can open the roads for everyone to directly invest in bitcoin legally through banking channels. As it has done with gold, the Indian central bank can continue accumulating bitcoin as the country’s reserves. Due to bitcoin’s fixed supply of 21 million, accumulating earlier than other countries will have a significant advantage in years to come. These bitcoin reserves will be beneficial for carrying out public capital expenditures and aiding the private sector through serial reforms.
Whenever a new investment opportunity knocks on a country’s doors, it has the potential to have an entire ecosystem built up around it. The same is true for bitcoin. It will give rise to new entrepreneurs, new start-ups, new businesses, new innovations, products and services, consumers, and altogether new markets. It happened with the internet and smartphones.
It is happening with other technologies like AI and IoT. Moreover with blockchain technology and Bitcoin in some countries like Singapore, Germany, and Switzerland. Hence, let bitcoin flourish in a regulated environment around the world. This philosophy may run contrary to the rebellious roots of some Bitcoin enthusiasts. Who strive to challenge the current financial system. But let’s be practical here. If bitcoin has to reach a population of 1.3 billion people like India. It will only happen through appreciation, acceptance and minor adjustments.
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Writer, researcher, and analyst on cryptocurrency and blockchain technology at L&P Digitech Pvt. Ltd. Also managing the content with SEO at this current company. Keen interest to know more about new technologies related to the crypto world and blockchain technology. Completed Masters in Computer Application (MCA) and holds Post Graduate Diploma in Instructional Designing with sound knowledge in Articulate3. Out of all, love to travel, listen to music, and to eat also.