Aadhaar a game changer but concerns on security remain

  • While the unique ID has eased transfer of benefits, there’s a need to plug leakage of data
  • In 2010, Aadhaar was rolled out to provide every Indian resident with a unique identification

Shreya Nandi
First Published12 Dec 2019
Aadhaar has become the world’s largest biometric identification, with UIDAI having issued more than a billion cards.pradeep gaur/mint
Aadhaar has become the world’s largest biometric identification, with UIDAI having issued more than a billion cards.pradeep gaur/mint(Pradeep Gaur/Mint)

The rollout of the 12-digit unique identification number Aadhaar has been one of the biggest game changers for India in the past decade. Modelled after the US’s social security number, Aadhaar has now become the world’s largest biometric identification—iris and fingerprint scan, with the Unique Identification Authority of India (UIDAI) having issued more than a billion cards.

The role of Aadhaar has undergone a sea change since its implementation in 2010 by the United Progressive Alliance (UPA) government. The project was created to provide every Indian resident with a unique identification number, which can be used to avail certain benefits offered by the government.

Over time, presenting an Aadhaar number has changed from being voluntary to mandatory for direct cash transfers for cooking gas subsidy (Pratyaksh Hanstantrit Labh or PAHAL), Ayushman Bharat and Mahatma Gandhi National Rural Employment Guarantee Scheme, among others, as the government aimed at increasing accountability and transparency. Using technology—Jan Dhan, Aadhaar and mobile (JAM) trinity—to provide subsidy has helped the government better target beneficiaries, removing middlemen and plugging revenue leakages.

The National Democratic Alliance (NDA) government has claimed to have saved 51,664.85 crore in 2018-19 through direct transfer of subsidies to genuine beneficiaries. Since the direct benefit transfer (DBT) scheme was implemented in January 2013, it has helped the government save as much as 1.41 trillion, government data showed.

The government also made it mandatory to link Aadhaar with Permanent Account Number (PAN) card to deal with unscrupulous people who hold multiple PANs each in order to evade taxes. The government claimed that linking the two documents makes it easier for the income-tax (I-T) department to analyse and assess the finances of an individual, which can thereby plug loopholes pertaining to tax evasion, if any. In fact, the Union budget 2019 proposed to allow interchangeability between PAN and Aadhaar, indicating that the relevance of PAN is bound to decline.

“Aadhaar has become a foremost technology instrument which now not only empowers people to establish their identity anywhere, anytime but also enables them to receive their entitlements and exercise their rights without any fear of being left out or their rights taken away. Payments to the beneficiaries are made directly and swiftly into their bank account from the government treasury. It has brought transparency in governance and delivery system and has cleansed delivery databases of fakes, duplicates and intermediaries,” Ajay Bhushan Pandey, revenue secretary and former chief executive officer of UIDAI, said.

“Further, Aadhaar is being used in bank accounts and income tax to check tax evasion, money laundering, etc. Undoubtedly, Aadhaar has enhanced government’s ability to directly connect, reach, and serve people in a cost-effective, efficient and transparent manner,” Pandey told Mint.

The 12-digit unique identity project was, however, criticized over the privacy and security of personal data collected by the UIDAI and over concerns on its compulsory use for availing most services.

However, in a historic judgement, Supreme Court in September 2018 upheld the constitutional validity of Aadhaar and ruled that the Aadhaar Act doesn’t violate the right to privacy if one agrees to share biometrics. Private companies including fintechs and mutual funds were barred from using Aadhaar card for know your customer (KYC) formalities. The apex court maintained that Aadhaar will be needed for various other purposes including income-tax return (ITR) filing and for DBT and most welfare schemes.

The judgement spelled trouble for several entities as the cost of e-KYC verifications for banks, financial technology companies and telecom service providers had increased substantially after the Supreme Court ruling.

Experts said that while benefits of Aadhaar cannot be ruled out, the biggest contradiction is that it was never meant to be mandatory. There have been several cases of Aadhaar data breach and there has to be increased awareness among people and they should be careful before sharing the unique identification number.

“Consequently, cybersecurity was never meant to be a part of the Aadhaar architecture. With demonetization and with the government connecting it with income-tax records, it has created an ecosystem around Aadhaar that is completely unsecured,” Supreme Court advocate Pavan Duggal said, adding that the biggest miss for the government is that the law is not focused on the cybersecurity ramifications of Aadhaar.

“The future lies in fortifying the Aadhaar ecosystem in terms of cybersecurity. It is a porous leaking ecosystem that needs to be rectified.The government has to make it more secure and sensitize people so that they don’t share and use their unique identification number without being sure,” he added.

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