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The Headlong Rush to Aadhaar

Bibek Debroy, Honorary Fellow, Skoch Development Foundation

Let’s backtrack a bit. There was originally a Multipurpose National Identity Card (MNIC) idea, started under the NDA government. This was meant to be a card issued to all India’s citizens and the Citizenship Act was amended and Citizenship (Registration of Citizens and Issue of National Identity Cards) Rules were notified in 2003. This was driven by security motives and a desire to curb illegal migration. While MNIC has been subsumed into the Unique Identification Authority of India (UIDAI) and Aadhaar, and we may eventually get a register of Indian citizens, one remains skeptical. Do political parties wish to curb illegal migration? Had we really wished to do so, we would have instituted a system of legal work permits for neighbouring countries. Low-skill migration is often seasonal and legal work permits also facilitate return of migrants. Apart from the minor issue that we will have numbers rather than cards now, this has been a major change. Unique identity numbers (UIDs) will be given to residents and not citizens. Sure, as the name implies, “Aadhaar” is only a base and we can build on that. Perhaps Home Ministry will eventually use UIDs to sift residents from citizens. Until then, since Ajmal Kasab was one of the first to be enumerated in Census 2011, he will also presumably be one of the first to get UID.

We move on to the second idea now, one also stated in Nandan Nilekani’s book “Imagining India”. While this is an old idea, it was pushed under UPA, at least in thought, if not in deed. There is a lot of public expenditure in India, such as on subsidies (food, fertiliser, petroleum products, power, road transport). This is inefficient. Subsidies meant for BPL go to non-BPL (sins of commission) and genuine BPL are not included in lists (sins of omission). If we can only resolve this and perhaps move to direct cash transfers, we will weed out both leakage and high administrative costs of delivery. That’s a fair point. When one says only 15% of public expenditure reaches target beneficiaries, one often assumes remaining 85% is leakage and corruption. That’s not quite true, because 85% also includes high administrative costs of delivery, PDS being a case in point. PDS is a good instance of what goes wrong. If subsidised food-grain is “leaked” to non-BPL, that’s sometimes because BPL are not included in lists. Hence, this isn’t quite “leakage”. The prices granted to ration shops are also so unrealistic that the system builds in leakage. Otherwise, no one would run a ration shop. But to get back to the point, there are two problems with this subsidy and cash transfer idea. First, we have to agree on what is BPL. We have gone round and round in circles on this one, despite it having been argued since 9th Plan that decentralised identification (on basis of identified criteria) is the route to take. So we have quibbles between Planning Commission and Rural Development Ministry. Here again, “Aadhaar” is no more than a base. What we do with it is a function of other policy decisions and there is no particular reason for optimism.

Second, for this to work, UID has to be mandatory, not optional. Within the country, because of procedural and other costs in obtaining numbers and fears that this will work against the inclusion idea, no one has ever suggested Aadhaar will be mandatory. However, in Davos, Deputy Chairman of the Planning Commission did suggest it would be mandatory. If the subsidy idea is going to work, Aadhaar has to be mandatory and we can’t continue to beat around the bush. Indeed, there are problems of inclusion. The entire system is demand-driven, through registrars. Consequently, those who have passports, driving licences, bank accounts, PAN numbers, mobile connections, EPFO accounts and voter ID-s are likely to get UIDs first, thereby excluding under-privileged. But the counter-factual is also important. The under-privileged are excluded even today. Other than subsidy-targeting, another advantage of Aadhaar is that it unifies procedural requirements across a variety of government documentation and identity proofs. UID becomes a common base. But there again, for this to work, Aadhaar has to be mandatory. While inclusion is an issue, and there has been talk of offering fiscal incentives to poor people to get enrolled in Aadhaar, there is always a centre and a periphery. As long as the radius is becoming shorter and the periphery is becoming incrementally integrated with the centre, should we worry? By insisting de jure that it is optional and hoping de facto that it will become mandatory, we aren’t solving the problem.

There is a point that Nandan Nilekani can legitimately make. While BPL identification remains contentious, Aadhaar will eliminate multiplicity. After all, there cannot be two people with the same name, date of birth, residence and biometry. There is an issue here about why we want residence data. On its own, Aadhaar doesn’t create any entitlements and residence is a tough one for many poor people. If residence proof is required for some other government purpose, it can always be added on to Aadhaar. For this hypothesis of multiplicity being reduced to be acceptable, one has to assume that biometry is reliable. One also has to assume that delivery points have required biometry readers. On neither of these is one convinced. There are privacy and accuracy issues connected with data too. In pilots, data are being collected that are much more than UIDAI’s core mandate. Why are these being collected? What are they going to be used for? What is the guarantee that such data are not going to be misused?

If subsidised food-grain is “leaked” to non-BPL, that’s sometimes because BPL are not included in lists. Hence, this isn’t quite “leakage”. The prices granted to ration shops are also so unrealistic that the system builds in leakage

But there is a broader issue. The National Identification Authority of India Bill was introduced in Rajya Sabha in December 2010. It isn’t legislation that has been passed by Parliament. Take an example from the Bill. “Demographic information includes information relating to the name, age, gender and address of an individual (other than race, religion, caste, tribe, ethnicity, language, income or health), and such other information as may be specified in the regulations for the purpose of issuing an Aadhaar number.” The name, age, gender and even the address are fine. But what is this “other information” and how has UIDAI been authorised to collect this? The “regulations” aren’t known yet. The point is a simple one. This is a major initiative, with the potential to change several things. However, there are several issues to be sorted out too. Therefore, the enactment of the legislation and the formulation of regulations and rules are critical. Neither is known and a Bill is only a draft. It isn’t law. Given this, what was the need to fast forward the process and begin to issue numbers without statutory backing? We should ask Ranjana Sonawane what she has got out of it. In case we have forgotten who Ranjana Sonawane is, she was the first one to get an Aadhaar number, 782474317884 to be precise. She lives in Tembhli village in Maharashtra, and with ten other tribals, she got the number in November 2010, even before the legislation was placed in Parliament. The Prime Minister told her, “This scheme for the common man is a symbol of new and modern India. Now you will get the benefit (of government schemes) that you didn’t get so far.” Given what has been said, is this true? And if not, what was the point of the farce? Shouldn’t we ask Ranjana Sonawane what she has got so far for this piece of paper? Aadhaar represents the use of technology and it can be empowering. But it is no more than a tool. It doesn’t get us much until other problems are sorted out, including that of governance. Why create the euphoria and the hype and the unwarranted expectation?

The US social security number (SSN) hasn’t overnight become what it is today. The exercise started in 1936 and the first person who got it was someone named John David Sweeney. It still isn’t mandatory and till the 1980s, was never used to prove identity. During the New Deal period, SSN-s were issued through employers. A country where employer-employee relationships are the norm is somewhat different from a country that is rural, with substantial levels of self-employment. If Aadhaar is being issued to better off sections, so be it, though they need it less. But if it is being issued to poorer sections, and de-facto mandatorily, are we imposing compliance costs and crowding them out? Something that goes in the name of inclusion can actually lead to exclusion. That’s the reason we should have been a bit more circumspect and careful, not plunged in headlong.

Bibek Debroy

Bibek Debroy is an economist and was educated in Ramakrishna Mission School, Narendrapur; Presidency College, Kolkata; Delhi School of Economics and Trinity College, Cambridge. Presently, he is Chairman, Economic Advisory Council to the Prime Minister, Government of India. He has worked in Presidency College, Kolkata (1979-83), Gokhale Institute of Politics and Economics, Pune (1983-87); Indian Institute of Foreign Trade, Delhi (1987-93); as the Director of a Ministry of Finance/UNDP project on legal reforms (1993-98); Department of Economic Affairs (1994-95); National Council of Applied Economic Research (1995-96); Rajiv Gandhi Institute for Contemporary Studies (1997-2005); PHD Chamber of Commerce and Industry (2005-06); and Centre for Policy Research (2007-2015). Dr. Debroy was also Member, NITI Aayog up to 5th June 2019. He has authored/edited several books, papers and popular articles and has also been a Consulting/Contributing Editor with several newspapers.
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