Aadhaar Number in India

The Possibilities of Aadhaar Number

The Aadhaar number is a powerful tool as governments move to more individual-oriented programs. It is an identification infrastructure available to every resident in India, including infants

Economic growth is not an end in itself; its power lies in the ability it gives us, the financial wherewithal to address the many problems that a developing country faces. Governments in India have accordingly, with economic growth, implemented new social programs and safety nets that tackle our poverty, health and education challenges. The ambitions of these programs however, have been marred by challenges in execution, and a significant one has been the lack of clear identification and targeting of individual beneficiaries.

The problems of identification bog down millions of people in India across communities and in different situations. Rural women for example, face difficulties in accessing social benefits and employment, especially if they are not part of a household; most benefits and programs, as well as identity mechanisms are linked to households, and single women or widows are excluded as a result. Backward communities and tribal groups similarly find themselves caught in a cycle of exclusion, where the lack of one service cuts off identification documents and consequently access to other services, such as when the inability to get a ration card also means difficulty in opening a bank account.

The urgency of the challenge

Addressing fundamental problems of exclusion has become especially urgent for us today. Thanks to development, millions of Indians today are getting a realistic shot at improving their incomes, and having a life much better than the one their parents had. But access to economic opportunity in India so far has been highly inequitable – India’s urban, middle-class and elite residents have seen the most significant gains from growth, thanks to the easy access they have to our infrastructure and institutions, such as in education, health and finance. For these residents, the fruits of growth have been tangible: employment opportunities on completion of college, or from training in IT skills and English; access to finance instruments that enable entrepreneurship, savings and investment; access to infrastructure such as telecom, internet, roads, rail and air connectivity that have helped improve productivity and incomes. Such opportunity on the other hand, has been harder to come by for the poor in rural India and in our cities and towns.

The objective of the UIDAI, to issue a unique identity number for every resident in the country, goes to the heart of ensuring greater opportunity. The role of the Aadhaar number is that of an enabler – a number that helps governments design better welfare programs, enables residents in both urban and rural India to access resources more easily, and allows agencies to deliver services more effectively and transparently.

An individual, recognized identity

We’ve made substantial progress in India over the last few years, in how we approach and tackle poverty. For one, we view poverty less as a monolithic experience; we have acknowledged that disadvantaged individuals face different kinds of shortages, and need varied interventions at different points in their life to move out of poverty, and access the opportunities India’s growth offers. A child of a Below Poverty Line (BPL) family for instance, requires effective investments in school education, and immunizations, which will give him the skills and ability to be employable as an adult. Adults who are in the BPL category need investments in re-skilling programs, safety nets to protect them during periods of unemployment, and financial access that will enable them to save and invest. And finally, the impoverished elderly require protections such as a regular, reliable pension.

This recognition means that the individual is the real target of social programs, and not the household. The government has accordingly launched a gamut of programs aimed at addressing the varied requirements of people in poverty: the Janani Suraksha Yojana effort is targeted to the health of pregnant women and their infants; the Sarva Shiksha Abhiyan program focuses strongly on keeping children in school; the Rashtriya Swasthya Bima Yojana provides health insurance for adults and children; the National Rural Employment Guarantee Scheme guarantees hundred days of work for the rural unemployed, and is a cushion for lean, hard times.

Even as we tailor our approach to welfare and social protections however, fundamental issues of identification remain. Our programs for instance, have remained focused on household-based identification, and the coverage of such identification is program-based and not universal.

The Aadhaar number is a powerful tool as governments move to more individual-oriented programs. It is an identification infrastructure available to every resident in India, including infants.

A technology based infrastructure

The Aadhaar number represents a sharp transition from paper-based to IT-enabled identity systems. These numbers, which will be linked to biometric and demographic information to ensure their uniqueness, will be stored in a secure central database. The database can be contacted for identity authentication from anywhere in the country The resident could verify their identity online and in real-time, by providing his/her demographic or biometric information or other information. Such an IT-enabled infrastructure would also support the remote verification of identity, creating possibilities for the remote delivery of services across the country. It provides a plug and play identification mechanism for public authorities and service providers across the country, which can use the Aadhaar number rather than building their own identification mechanisms from scratch.

Technology-enabled identity systems like the Aadhaar number are critical when the country’s banking systems, trading markets, and service delivery are ramping up their technology capabilities and enabling remote delivery of services. The public investment in the Aadhaar infrastructure is necessary to ensure that impoverished and disadvantaged groups in the population are not excluded from such technology infrastructure, and are able to access and leverage them for their benefit. For example, while mobile telephony has become widely available, only a small segment of the population can use such phones to buy products and services remotely, due to the difficulties in remote identity authentication. Aadhaar-linked remote authentication would enable poor residents to access such services easily.

Accountability through clear identification

The biometric aspect of Aadhaar is in my view, a particularly powerful feature of the number, and will play a significant role in increasing accountability for service providers and to broaden access. Biometric-linked authentication to access benefits would make it easy for service providers to limit leakages of resources and benefits to those who are not entitled to it.

Biometric authentication along with other factors of authentication also makes it easier to deliver public resources and services through a variety of agencies – public, private, and non-profit. The two-way approach in delivering entitlements and services – delivery followed by confirmation through authentication – increases the accountability of public and private service providers to the resident, since the resident’s relationship with the agency is far more direct, and confirmation bypasses all intermediaries.

Seamlessness in service delivery

In India, a narrative has long existed on the divide between urban and rural India. While urban India survived and even prospered, the rural country, ‘Bharat’, was left behind, history’s victims, to be provided for and rescued from their circumstances. This divide was not merely one of perception – there were real, vast economic distances between the urban and rural country in the absence of effective infrastructure linkages, and markets largely limited to urban cities and towns. In governance as well, we approached these regions differently, with separate ministries for urban and rural development, and separate regulatory institutions in banking, insurance and other services. Welfare programs have also been tailored individually – the National Rural Health Mission for example, targets health services in rural India while the Urban Health Mission was planned for India’s cities and towns; the JNNURM is focused specifically on urban renewal, while the BRGF funds infrastructure in backward, rural regions.

The Aadhaar infrastructure would enable us to incorporate these changes into our policies and our economic approach, by powering up applications that address the infrastructure challenges in rural regions, and deliver services seamlessly to both urban and rural India. Service providers can for example, verify identity remotely through Aadhaar-linked technology systems and then deliver services, reducing the investments required to provide services in rural and sparsely populated regions, increasing competition, and providing choice to the consumer

For instance today urban residents are able to use ATMs to access their bank accounts and withdraw money – such access is rarely more than a short distance away. For the rural community however, banking services are difficult to access; bank branches are some distance away...

An Aadhaar-linked banking solution however, could create local networks of business correspondents who enable residents in both rural and urban India to verify themselves using the Aadhaar number, and make transactions, remotely, through a mobile device. This would pave the way for the equalization of access, and cheaper services.

It would also give rural India the opportunity of self-service. Just as remote connectivity to markets through mobile phones have helped eliminate middlemen and allowed farmers in some areas to negotiate crop prices directly with the mandis, remote Aadhaar authentication allows the rural customer to employ the same self-service models urban residents now access, in not just banking transactions but also in buying stocks, retail goods, and accessing a multitude of information services through their mobile phone.

A reliable identity infrastructure like the Aadhaar number can help establish widespread trust relationships with poor residents since credit and other history of residents become mobile. Agencies would no longer have to carry out their own KYC (Know Your Customer) procedures before they service customers – Aadhaar KYR (Know Your Resident) could be used before an insurance company issues a new policy, or before a bank opens a new account.

This clarity and ease in identity verification represents a significant growth opportunity for public and private agencies in India. It would lower organizational risk, and empower agencies in banking, insurance and other consumer industries to offer more services, expand their modes of delivery, and include larger numbers of impoverished residents within their ambit.

Such seamlessness in service delivery will become possible not only between urban and rural India, but also within markets. The resident would also be able to switch service providers with less information loss.

The Aadhaar number would be the first time the government is implementing a universal infrastructure solely for establishing the identity of the individual. We shouldn’t underestimate the effect of such identity recognition by the state. Identities of people are inevitably in part social and political constructions, and individual recognition by government makes possible public programs that take into account a resident’s unique needs, aspirations, and circumstances. It paves the way for a formal acknowledgement of the resident which is independent of the household and community he/she belongs to.

Capturing the spirit

In the last few years, we have witnessed a widespread rethinking on how we view the mechanisms through which people can access development and opportunities for growth. From thinking purely in terms of the funding of welfare schemes and public services, we have begun to consider how these efforts can empower and provide individuals with effective tools to come out of poverty.

The Aadhaar number strengthens our ability to respond to these calls, and imbue our policies with the principles of empowerment for the resident. We have the opportunity to move to an environment where residents in India are given choice and power in exercising benefits, and in interacting with responsive, accessible governments and service providers. These gains could go down to the last person in the line: to the most impoverished, the marginalized and the destitute. 

By : Nandan Nilekani,  is Chairman of the Unique Identification Authority of India and former Co-Chairman of the Board of Directors of Infosys Technologies Limited. (E-mail : Nandan.nilekani@nic.in)