Home / Politics / Policy /  Aadhaar will plug leakages in welfare delivery mechanism

New Delhi: Maharashtra weeded out 2.9 million bogus ration cards last year, launching an identity verification drive to make the system foolproof. Residents had to provide electoral roll numbers, electricity bills and rent receipts to receive a ration card. Migrants had to present an official document confirming their change in residence. That led to the exclusion of many poor, homeless and migrant families as they lacked the necessary papers.

This is the kind of issue that Aadhaar, aimed at giving a unique identification number to the entire population of the country, aims to address.?Welfare schemes are plagued by leakages and don’t reach the intended beneficiaries. The lack of proper identification exacerbates this.

The overarching objective of Aadhaar, which was formally launched in September and has so far enrolled 100,000 people, is to make public services more efficient.

Neel Ratan, executive director of consultancy firm PricewaterhouseCoopers, cites the fertilizer subsidies as an example of misdirected policy.

“Currently, there is no mechanism of identifying where a majority of the subsidy money is going," he said. “The biggest benefit of the Aadhaar project will be that it will help in managing the subsidy burden of the government better, which runs into lakhs of crores every year, freeing up significant funds by eliminating the leakage and undeserved beneficiaries."

The Unique Identification Authority of India (UIDAI), under which the Aadhaar project is being run, will give every citizen a 12-digit unique number that also captures a mix of basic demographic data and biometrics, including fingerprints, photographs and iris scans. An identity thus established will remain with the person, wherever he or she moves in India.

UIDAI is building a central data repository, which will contain the demographic and biometric details of those enrolled in the project. UIDAI is building applications that will allow any government or private agency to authenticate identities online and in real time, without divulging personal information.

The system should eliminate the possibility of people holding multiple identity proofs such as driving licences and ration cards. It can also plug leakages that arise from, for instance, multiple and fake enrolments in the primary education system. Welfare schemes that provide midday meals, books, scholarships, uniforms and bicycles to the deserving can be better targeted.

“It is clear that if various databases and government schemes are linked to Aadhaar, it will not only create more efficiency in the system, but also drive policy decisions," said Praveen Bhadada, engagement manager at Zinnov Management Consulting.

He said Aadhaar is evaluating cloud computing technology aimed at anywhere, anytime access. “If the government allows third-party application developers to build applications on the Aadhaar platform, it will completely change the e-commerce and m-commerce scenario in the country as everything could be linked to Aadhaar," Bhadada added.

With the government’s thrust to take banking to the poor, Aadhaar’s proposition on financial inclusion is an interesting one. According to estimates, while there are around 600 million bank accounts in the country, only 20% of the 1.2 billion population has bank accounts as many individuals have multiple accounts.

UIDAI is in advanced talks with the Reserve Bank of India and the department of revenue on making the Aadhaar number enough to qualify as the know-your-customer norm for banks. The bank will, therefore, incur no cost in opening the account as verification will happen online.

“While banks will get Rs50 per enrolment by signing up any resident for Aadhaar, this proposition can be especially attractive for banks in meeting their financial inclusion plans," said a discussion paper on Aadhaar-based financial inclusion. “They have already committed to open bank accounts in villages with population greater than 2,000 people by year 2012."

Moreover, the fact that Aadhaar could enable micro-ATMs (automated teller machines) will mean more empowerment for people in rural areas as payouts go directly into accounts.

While the scope of what can be achieved is not in doubt, implementation will be key.

For instance, the department of food and public distribution needs to create the applications that will make use of Aadhaar to track the delivery of rations through the various levels.

Navin Agrawal, executive director of audit and consulting firm KPMG, says the beginning that has been made by UIDAI under chairman Nandan Nilekani “is making most ministries and government departments very receptive towards it".

Sunil Chandiramani, partner at audit and consulting firm Ernst and Young, and an adviser to the project, said there will have to be a clear mandate from the Centre to the various government departments to build those applications that integrate Aadhaar with their service delivery mechanism.

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