Aadhaar Is A Game Changer But Its Success Depends On How It Is Used

Will the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, really prove the panacea for the problem of leakages in government welfare programmes? Or will it end up severely compromising the privacy of ordinary citizens by giving the government a tool to spy on their every activity?

Both the hope and the fear are over-stated, though both have some basis.

This government as well as the predecessor government, which initiated Aadhaar, have long argued that the unique identity number, supported by biometric data, will ensure that government doles go only to those truly deserving them. Success stories were trotted out about how use of Aadhaar managed to bring down leakages in various schemes, notably the public distribution system (PDS) in Andhra Pradesh.

Aadhaar will certainly help curb duplication. Since the enrolment process involves a de-duplication exercise (where a person’s biometrics are run through the database to ensure that she does not have an entry under some other name), the chances of one person having two or more ration cards or bank accounts become close to nil. Diversion of food grains and kerosene from the PDS are invariably based on duplicate and fake ration cards (there are other methods of diversion but this is a foolproof one). There have admittedly been problems with Aadhaar – trees and animals have got cards – but it is the best weeding out exercise that is there right now.

That said, Aadhaar by itself will not do that; its use for this purpose will need to be expressly stated. So, governments will have to bring in and enforce a rule that ration cards or BPL (below poverty line) cards will only be given to people with Aadhaar numbers. Or that old-age pensions will only be paid into Aadhaar-linked bank accounts.

But there could be another problem. The PDS comes under the jurisdiction of state governments. While most state governments have digitised their beneficiary lists in order to conform to the National Food Security Act (NFSA), they don’t share these lists with other states. So it could be possible for a person, say a migrant worker, to use the Aadhaar number to get a ration card in his village in Bihar and in Delhi where he works. Unless there is a system where the ration card holder has to go to the ration shop and prove his identity at each transaction (which is what the PoS system being followed in some states and which the Economic Survey made a pitch for will do), such duplicates will be hard to catch. The numbers doing this may not be huge, but this possibility needs to be factored into and addressed. Technology can help do this easily but state governments will need to make the effort.

Secondly, and more importantly, all that Aadhaar does is confirm that a person going to a ration shop or kerosene depot is who he says he is. But since Aadhaar has no income data, it will not indicate whether or not the person is from a below poverty line (BPL) family. Now a person who is earning upwards of Rs 10 lakh a year may not go to the trouble of getting listed under the BPL category, but there will be people on the margins or even substantially above the BPL cut-off line who may do so. Certainly, the pilferage industry will try to use this loophole to the extent that it can. Across states, there are a large number of ration card and BPL card holders who are not eligible for either and the rollout of the NFSA got delayed precisely because politicians were unwilling to handle the hot potato of weeding out ineligible people from BPL lists. Aadhaar will not help do this weeding out. That will require human intervention and political will.

This problem of whom to exclude can be addressed with the results of the socio-economic caste census (SECC). The data enables the tracking of the socio-economic status of individual households (only the rural SECC data is out for now). So a person already living in a pucca house cannot apply for a grant under the Indira Awas Yojana. Aadhaar will come into the picture only when a person identified as living in a kuchcha house applies for benefit under the Indira Awas Yojana and the money is paid into an Aadhaar-linked bank account. But this again requires a political decision to go strictly by the SECC data. If political arms of governments pussy-foot on this, Aadhaar will not help in trimming the subsidy bill.

What, then, of privacy concerns? The main concern of the opponents of Aadhaar (it unites both the right and the left) is that it can be used by intelligence spooks and tax babus to go on random fishing expeditions, tracking people’s movements and financial dealings and more. The fact that Aadhaar enrolment does not involve collecting any information other than date of birth and permanent address does not reassure them.

There could be some ground for this apprehension, considering Aadhaar is increasingly becoming compulsory for opening bank accounts, PAN cards and passport. The Act says even a private entity can ask for Aadhaar to verify a person’s identity, which means one may have to give one’s Aadhaar number even when taking a cell phone connection. This is, indeed, worrying. Fortunately, the current Act has more safeguards on sharing of information and circumstances under which information can be revealed than the National Identification Authority of India Bill tabled by the previous government. But the vague definition of `national security’ as the circumstance does not give much comfort that the provision will not be misused.

The best way to address this concern is by restricting the mandatory use of Aadhaar to only those wanting to avail of government welfare services and not all government services. If a person does not want to avail LPG subsidy, why should he be forced to link his Aadhaar card to his bank account or make it mandatory for opening a bank account, since a person is legally entitled to have different accounts? Insisting on Aadhaar for passports makes sense – it could tackle the problem of fake passports – but why does one need it for PAN cards and filing of income tax returns? Why should Aadhaar be mandatory for registering property transactions, including rent agreements?

Once these concerns are addressed, there will be little basis for opposing Aadhaar on grounds of privacy. After all, there are enough safeguards against stealing of biometric information. If those worrying about privacy are still not convinced, then they need to suggest an alternative solution for a leakage-proof delivery of welfare services.

The fact remains that Aadhaar is currently the best bet for this. Now that the technological solution is there, pressure should be put on the political class to restrict government doles to limit these to only the poor and deprived. Aadhaar is a game changer. It must be made to work.