DSIJ Mindshare

Aadhaar: A misgUIDed effort?

The bureaucracy, which is amongst the three pillars of democratic India, has many a time been blamed for delaying crucial projects. For this reason, when an innovative project like the Unique Identification (UID or Aadhaar) was launched, the Planning Commission did not think twice before handing over the reins to Nandan Nilekani, whose managerial credentials are well known. Nilekani was asked to execute the project in an effective and efficient manner. At that time, people applauded the idea and praised the government for showing such maturity.

However, things have not gone as per the plan, and after wasting three full years and almost Rs 5000 crore (estimated figures), the project is nearly on the verge of being scrapped. So, what went wrong? The idea, which was to prove a
masterstroke for the UPA-II, has suddenly become a thorn in its crown.

An Immature Beginning

Nilekani was supposed to run this project in a professional manner. However, the Parliamentary Standing Committee (PSC) examined the project in detail over the past year and found it to be deeply flawed in conception and execution. The committee has observed that the complex scheme is full of uncertainty, as it is built upon untested and unreliable technology and a host of assumptions. It also observed that entrusting the responsibility of verification of information of individuals to the registrars to ensure that only genuine residents get enrolled into the system may have far-reaching consequences with respect to national security. The security concern is so great that the Home Minister, P Chidambaram has himself criticised it.

“The most important thing is that the Standing Committee is questioning the core existence of Aadhaar, because there are grave constitutional violations. Then, there is a major issue when you find that things were changed in between. Initially, the whole enrolment
was to be done by the Home Ministry under the Registrar General of India (RGI). UID was supposed to carry only the de-duplication process of the collected data. It was supposed to be the technical back office of the Home Ministry”, explains R Ramakumar, Asst. Professor, Tata Institute of Social Sciences (TISS).

The PSC has asked whether any committee had been set up to study the financial implications of the UID scheme. It also asked the Ministry of Planning to furnish the details of feasibility study carried out, if any, covering all aspects of the UID scheme. These include aspects such as setting up of the proposed National Identification Authority of India (NIDAI), as well as a cost-benefit analysis. To this, the Ministry of Planning informed the PSC in a written reply that no committee has been set up to study the financial implications of the UID scheme. It also accepted that biometric matching (which involves patterns matching) by its very nature, will suffer from inaccuracy.
The choice of using the authentication services is left to the third party service provider. Concerned agencies will have to develop policies and procedures to handle such exceptional situations.

“Nilekani is not at all behaving like a corporate person, as a corporate person would not allow huge expenditure to be incurred without undertaking a feasibility study and exploring alternative options of giving identity proof. The basic corporate principle has not been followed”, adds Ramakumar.

Reverse Engineering

In the Indian democratic set-up, the first step to a proposed scheme is the drafting of a bill by the concerned authorities. This bill is sent to the PSC for review. Once the committee reviews it, the draft is presented in the Parliament for discussion and passage. After due debates and discussions, bills are passed and thus implemented. 

However, the so-called corporate honcho and his bunch of over-ambitious managers implemented the project without even preparing the draft. Now the question is, who gave them the authority to waste so much public money on a scheme that has not even been legitimately debated by the Parliament? The whole idea that the executive approved the project holds no ground at all. As a consequence, when the draft bill was prepared and presented by the Planning Commission, it was rejected by the Standing Committee even before it reached the Parliament.

Dr Usha Ramanathan, independent expert, stated in a reply to the PSC that, “It is a plain misconception to think that the executive can do what it pleases, including in relation to infringing constitutional rights and protections, for the reason that the Parliament and
the legislature have the power to make laws on the subject”.

Will Legitimise Illegal Residents

As per the project details, a resident who does not possess any documentary proof of identity or a proof of address can obtain an Aadhaar number with the reference of an introducer. This clearly points to safety concerns and duplicity. The Ministry of Home Affairs has identified flaws in this enrolment process followed by the UIDAI, citing cases where people have got Aadhaar numbers on the basis of false affidavits. Besides, with at least six agencies collecting information – including the NPR, MNREGA, BPL Census, UID,
RSBY and Bank Smart Cards – the Home ministry is also concerned about the lack of co-ordination leading to duplicated effort and expenditure.

“The Home ministry does not trust the data collected by the UID because of its flawed execution. The UID introduced a scheme where people can be enrolled just by furnishing the details of an introducer who has already been enrolled under the UID. In Pune, for example, it came to light that a doctor has been signing the enrolment forms for Rs 100 per person”, says Ramakumar.

While on one hand, the country is facing a serious problem of illegal immigrants and infiltration from across the borders, on the other, the National Identification Authority of India Bill, 2010 proposes to entitle every resident to obtain an Aadhaar number, apart from entitling such other category of individuals as may be notified from time to time.

Public Money Down The Drain!

Another issue is that of multiple identity proofs. If Aadhaar is supposed to be the sole proof of identity, what would all the other proofs stand for? To this, the Planning Commission has stated that all the other documents are relevant to a domain and for a service,
while the Aadhaar number is to be used as a general proof of identity and proof of address.

Basically, people have been misled into this project and have been fed wrong information. The data of people who have enrolled for the ID will have to be destroyed, since the Home Ministry does not trust this data. Also, banks have clearly stated that they will not accept Aadhaar as identity proof, and some other proof of identity also needs to be furnished.

Ponder Upon This

Ever wondered why Nilekani has not come out with a statement when the PSC rejected his pet project? Well, in August 2011 (when the government desperately wanted to counter Team Anna, who was criticising the government for sending the Lokpal Bill to the Standing Committee to influence the middle class against him) he had said, “I have had the chance to make a presentation on more than one occasion to the Standing Committee. Let me tell you they do an extraordinarily thorough job. I am very, very impressed with the quality of questions, the homework, the due diligence and the seriousness that they view these things with. They are the appropriate people, they are our representatives”.

UID: The Road Ahead

Now, the CAG is auditing the accounts of the whole project. In fact, the Attorney General of India has observed that if the bill is not passed for any reason, and if the Parliament is of the view that the Authority should not function and expresses its will to that
effect, the exercise would have to be discontinued. The Standing Committee has also stated that despite the presence of serious differences of opinion within the government over the UID scheme, the scheme continues to be implemented in an overbearing manner without regard to legality and other social consequences. The involvement of several nodal appraising agencies may work at
cross-purposes.

It is worth noting that according to a report carried by the London School of Economics, the Government of United Kingdom has abandoned its ID project (which was primarily the inspiration for Aadhaar), citing a range of reasons, including the high cost, safety issues, untested and unreliable technology, and the changing relationship between the state and the citizen.

“A fresh bill will take at least a year, and another year will be taken the Standing committee to study the implications. So, I do not think that the government is so keen on implementing it now. The government can actually bypass the Standing Committee technically,
though it will not do so because of the on-going controversies involved”, suggests Ramakumar.

It can be concluded here that the project seems ambiguous and lacks clear objectives. So, the government would be better off shelving the whole project and focussing on significant matters, rather than wasting public money on such schemes. Well, you can at least breathe easy and need not rush to the nearest booth to get yourself registered for the Aadhaar number right away.

MAJOR DRAWBACKS OF UID
  1. The project was approved in haste.
  2. There has been no feasibility study of the project.
  3. The system has far-reaching consequences with respect to national security.
  4. The project is directionless and has no clarity of purpose.
  5. It is built on unreliable and untested technology.
  6. The exercise becomes futile in case the project does not continue beyond the present number of 200 million enrolments.
  7. There is lack of co-ordination and difference of opinion on the project between the various departments and ministries of the government.

DSIJ MINDSHARE

Mkt Commentary19-Apr, 2024

Bonus and Spilt Shares20-Apr, 2024

IPO Analysis19-Apr, 2024

Multibaggers19-Apr, 2024

Mindshare19-Apr, 2024

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR