March 23, 2018

Aadhaar: The Potential and Limitations of India’s Digital ID

Man's fingerprints being scanned by machine
Kannanshanmugam,shanmugamstudio,Kollam via Wikimedia Commons

Aadhaar, Sanskrit for “foundation” or “base,” is a 12-digit unique identity number that has taken India by storm. While Aadhaar is not the first of its kind — it follows other Indian identification schemes such as the Multipurpose National Identity Card and the Smartcard Programme in the state of Andhra Pradesh — it is certainly the most successful. Unlike its predecessors, Aadhaar achieved scale; and, in early 2017, approximately 1.16 billion Indians (94 percent of the population) had an Aadhaar number.

The Unique Identification Authority of India (UIDAI), which administers Aadhaar, was launched in 2009. What would soon become the world’s largest biometric database was inaugurated in Tembhli village in the Nandurbar district of the Maharashtra state on September 29, 2010.

Selecting a low-income tribal village as the event’s location was intended, then-Prime Minister Manmohan Singh observed, to underscore that Aadhaar would benefit the needy. Sonia Gandhi, then-president of the Indian National Congress, reiterated the program’s intention to benefit all segments of society — a core value of the UIDAI — stating, “Our idea is to not just focus on development, but to bring about inclusive growth amongst our people.”

Being able to prove one’s identity is often necessary to open and access bank accounts, receive food vouchers, enroll a child in school, and vote. And yet, the World Bank estimates that 1.1 billion people globally are unable to prove their identity, the majority of whom are from Asia and Africa.

Addressing this problem, Aadhaar enables banks and mobile operators to offer traditional and digital financial services to underserved residents. It is designed to allow previously undocumented citizens to participate in the formal economy by accepting 18 proof of identity documents and providing safe, accessible places from which women and other vulnerable groups can enroll. By 2015, however, over 99.9 percent of all Aadhaar numbers had been issued to people who already had at least two forms of identification. Aadhaar’s inclusiveness, therefore, has yet to be fully realized.

In addition to providing citizens with a state-recognized identity, Aadhaar’s founders promise to reduce corruption and fraud in service delivery by ensuring that welfare benefits reach only their intended recipients. While the scheme certainly reduces the time spent in government queues requiring identity verification, the savings achieved by the government have been contested.

And while Aadhaar has nonetheless astonished observers with its impressive ROIs, ease of use, and scalability in one of the world’s most populous and diverse nations, the risks associated with it are worth studying for the many countries with hopes of replication, including Morocco, Tunisia, and even Russia.

Known challenges generally fall within three broad categories: privacy concerns, security concerns, and Aadhaar’s mandatory nature.

Those who criticize Aadhaar on privacy grounds have traditionally argued that the scheme was unconstitutional because it violated a fundamental right to privacy. In August 2017, a unanimous Supreme Court decision overruled the 1964 Kharak Singh verdict and held that Indians do enjoy a fundamental right to privacy. In response, however, Finance Minister Arun Jaitley asserted that exceptions to the order protected Aadhaar. But skeptics maintain that privacy ought to have been addressed prior to its launch. While Aadhaar only collects basic demographic data, services stacked on top of the “foundational” database continuously collect data and add it to centralized information about Aadhaar users. By the time we fully understand the privacy issues surrounding Aadhaar, critics claim it might already be too late to prevent abuse.

Another related class of criticism surrounding Aadhaar pertains to its potential security abuses.

Last October, BJP Member of Parliament Subramanian Swamy wrote a letter to Prime Minister Narendra Modi citing Aadhaar as a “threat to national security,” and allegations by petitioners that Aadhaar creates a surveillance society are currently being debated in the Indian Supreme Court. Such fears were only worsened in January this year, when The Tribune published a news piece titled “Rs 500, 10 minutes, and you have access to billion Aadhaar details,” which claimed their investigative team was able to obtain the particulars of Aadhaar users and print Aadhaar cards through an agent of a group running a racket. And while the UIDAI initially denied the possibility of duping the Aadhaar enrollment system, maintaining that authentication systems require biometrics in addition to Aadhaar cards and that “Aadhaar data is fully safe and secure and has robust uncompromised security,” such fears have not been entirely quelled.

A final wave of criticism lies in the increasing dependence on Aadhaar for benefits, pensions and subsidies. While the 2016 Aadhaar Act made the ID mandatory for some government benefits (such as a liquefied petroleum gas connection) activists have complained that central and state governments have demanded an Aadhaar number for other services, too — causing, in some instances, a denial of health care and social security. While ardent Aadhaar supporters still claim that the scheme is voluntary, the costs of opting out of Aadhaar at such high rates of penetration make the scheme increasingly mandatory in practice.

While the criticisms of Aadhaar based on privacy, security and dependence deserve further and ongoing assessment, some of these concerns can be addressed by amending legislation, increasing awareness, or improving security protections around Aadhaar (e.g., the UIDAI recently announced plans to roll out a new security process that addresses the data breach identified by The Tribune). In the final analysis, however, Aadhaar’s success must also be determined by its impact on the needy.

The introduction of Aadhaar alongside recent demonetization policies in the country are part of the central government’s efforts to formalize the unorganized sector —  informal employment, characterized by poverty, constitutes over 80 percent (pdf) of total employment in India. In order to fully evaluate Aadhaar’s merits, one must scrutinize the scheme’s impact on the informal sector.

For example, to maximize Aadhaar’s benefits, a participant should be able to use it as part of the broader JAM scheme (Jan Dhan or bank accounts, Aadhaar, and Mobile) and eventually receive insurance, pensions, direct cash subsidies and welfare through a mobile number connected to a bank account. Going “Faceless, Paperless, Cashless” presents a culture shock for street vendors, farmers, and informal sector workers for whom the transition from cash-reliance to mobile transactions and banking has required immense adaptation. While the acquisition of mobile usage skills is being accelerated through sheer necessity, an article in the Harvard Business Review claims that the informal sector bears “the brunt of demonetization.”

How will Aadhaar affect the social and legal protections of workers, mobility of labor, job security, welfare, and the support and benefits accruing to the lowest-paid informal wage workers? For example, if the cashless economy or its new regulatory environment becomes too cumbersome, or welfare benefits are insufficient, it is perhaps the most needy who will suffer most. While such questions are among the most significant in assessing Aadhaar’s merits, they may also prove the most difficult to study (pdf).

Until that time when we are able to evaluate the full range of impacts associated with Aadhaar, however, the jury is still out…

The views expressed in the Government Innovators Network blog are those of the individual author(s) and do not necessarily reflect those of the Ash Center for Democratic Governance and Innovation, the John F. Kennedy School of Government, or of Harvard University.

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