Aadhar – The Delivery Backbone

By GovernanceToday
In Aadhar
January 13, 2015

Imagine a country where when the child is born and the first thing he/she is issued is an Aadhar number. The information which can be used everywhere, by the government, corporates, hospitals, schools, colleges. It could be especially useful for the government which spends in crores to keep track of population, with no proof of validation. Let’s say after finishing college, if that individual applies for job and is called for an interview. The interviewer can check his whole academic record with just a single number.When he starts earning his salary gets into his Aadhar linked account. Now tax gets automatically debited and his spending/ transaction (cylinders, shopping) can be tracked. If he is engaged in any land possession, either ancestral or his own, the information will directly get updated and finally when he dies, his information gets updated; no need of death certificate.

In a sentence, the Aadhar card (UID) is an attempt to uniquely & digitally identify people for the primary purpose of tracking the social security of an individual. It is inspired by the Social Security Number issued in the USA. Note that a lot of countries including China have identification cards which the Aadhar is. But conceptually the Aadhar is supposed to benefit social inclusion on all development parameters (education, health, employment) and hence pitched as more than an identity card.

Aadhaar is actually a 12-digit number and not a card which is unique for every individual who enroll or apply to get his/her Aadhaar number. The Unique Identification Authority of India (UIDAI) is the regulatory body for this purpose.

India has become the first country in the world to issue a unique identity number for each of its residents from February 2011 which will allow an on-line verification.

aadharDuring the NDA rule, the UID was planned as a smart card based system. This would decentralize things, reduce cost, provide more security and work just like the way Publickey Cryptography works on the internet or more recently, like Bitcoins. However the UPA revoked this to establish a centralized bio-metric system which has a single point of failure.

During a conference in 2010, the father of the UIDAI, NandanNilekani terming the project a “massively complex project,” said the authority will  use state governments, banks, insurance companies and other such institutions as partners in enrolment. He even added that the verification process will be  kept pro-poor and inclusive.

“I think it is a very powerful and inclusive idea. It will help the poor have better access to public services and will be a great enabler for their financial inclusion. The flagship welfare schemes of the government can be made more efficient,” he said, adding that it will help strengthen national security, reduce fraud and increase tax collection.

Positive Move
With the technology in place, various pilots were initiated in districts of Maharashtra, Karnataka, Jharkhand and Andhra Pradesh. As things stand, 78 more districts have been added to the programme with 84 per cent of the population having Aadhaar numbers. Yet, just 24 per cent of the population is found to be fully compliant in 34 of these districts. At the same time, some state governments, too, have succeeded in creating some sort of DBT without the Aadhaar. This raises the issue of whether the massive exercise of Aadhaar could have been avoided since the option of National Population Registry (NPR) was already available. NPR currently uses Aadhaar as its backbone.

Though after four long years the statement that it is a good initiative is debatable. It would have been a good initiative if India had its social security figured out, which it has not.

For the urban middle class Indian with a PAN card, perhaps a passport and a driving license, the UID provides not much benefit. But then again less than 5 per cent of India pays income tax and getting the other 95 per cent under some kind of financial system can have significant benefits.

Then there is this whole issue about data privacy and fake UID cards being issue due to technical lapses or unscrupulous elements. About one UID number gets deleted every 10 seconds by the de-duplication system of the UID. One can only imagine the possible issues that can arise due to the authenticity of the biometric based system.

The Aadhar card can be put to good use if the holes in the systems it is supposed to help are plugged. Currently mobile phones have a better reach than the Aadhar cards and provide similar functional benefits and a mobile number serves a good purpose of the part of identifying people for pushing benefits. To justify the expense of the Aadhar card a lot more effort needs to be put in to streamline and make good use of the data and individual identity.

The biggest challenge though would be reach of banking system in India. Sixty percent of the 1.2 billion population in India remains outside the formal banking system. The success of the DBT depends entirely on the speed with which financial inclusion can be achieved.

aadhar-verificationThe argument made by advocates of Aadhar is that moving to cash transfer of subsidies would act as an incentive for millions of Indians in rural pockets to open Bank accounts and facilitate financial inclusion. This argument is valid if we assume that rural Indians have access to formal banking. And after that RBI to issue information to all banks to accept UID as sole identity card document for the account opening. It can be a misery only to the country like India, where having Aadhar is important to apply for passport but banks do not consider it as the sufficient document.

Aadhaar’s benefit for an individual lies in the fact that it gives an identity without seeking residence proof, unlike other identity systems. It is a portable number that can be used anywhere. All that is needed is an introducer who confirms the identity and address of the person he/she is introducing. These are some of the crucial issues of Aadhaar’s reach and the complex web of processes required before people can avail of benefits.

However, as the project goes digging through the narrow gallies of India, it seems to be a start in the right direction. The only hope is that this project doesn’t turn into a series of empty promises for India’s poor as other projects.

Ground level benefits of UID

Public Distribution System (PDS) is one such social security measure. People below a certain income are guaranteed access to subsidized food, kerosene and other regular supplies. Major issue in PDS is pilferage and quality of service neither of which are related to the unique identification of a person. Moreover UID claims to help identify a person when they migrate from a village to another village or city which is a genuine problem but again the PDS system is too corrupted & cartelized to make good use of the UID.

Financial Inclusion is another good reason often cited with the UID. The problem here is that banks do not really have any incentive to create & manage accounts for people with insignificant income. In many areas cooperatives have solved the  problem by building a good local network and in some areas PSUs have helped make banking accessible. A UID might help open bank account in this case, especially in the case of a migrant.

Direct Cash Transfers, Food Security and Guaranteed Employment are some of the large scale public schemes that could be better managed with the UID but the ‘ifs’ will always remain.