Indian law links 1bn-strong ID database to benefits claims

By on 22/04/2016 | Updated on 25/09/2020
The Parliament House Building, India

India took a step closer to the introduction of a universal personal identification number last month, when its lower house of parliament – Lok Sabha – passed the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill 2016.

This Bill suggests using the ‘Aadhaar number’ – an identification number issued by the Unique Identification Authority of India (UIDAI) – to manage the delivery of state subsidies directly into the bank accounts of beneficiaries.

The Opposition had introduced amendments to the Bill in the upper house – Rajya Sabha – to address concerns around privacy, data security, and the use of personal information collected by various agencies as part of the Aadhaar number generation process. However, after six years of debate and discussion, the government chose to pass the legislation as a Money Bill – meaning that the Lok Sabha could ignore these amendments.

According to government officials, Aadhar will be used in various schemes including cooking gas subsidy, the public distribution system (PDS), and subsidies for kerosene and fertilizers.
While Aadhar is yet not compulsory for securing access to these schemes, the Bill specifies that the government may require an individual to obtain an Aadhaar number to verify his identity before receiving government benefits.

This provision may help the Indian government to save millions of rupees spent on welfare payments, as it will help to prevent ‘leakage’ from public funds: under the current system, some funds trickle away as money is passed through multiple agencies on its long journey to the recipients.

The government also argues that the Aadhaar Bill will help to tackle financial exclusion, enabling people at the bottom of the income pyramid to access financial services.

“With Aadhaar Bill passed, it becomes much easier to identify someone. It is a step forward in terms of how it enables us to check credit history, to bring down frictions, bring down costs, set up micro accounts because the cost of authentication becomes less,” Jayant Sinha, the Indian Government’s minister of state for finance, said recently at a banking conference in Mumbai. He added that a host of new financial products could be made available to many people who have been excluded from the financial system.

The Aadhaar number is often compared with the Social Security Number system used in the United States. It has been a highly controversial issue in India since 2009, when the national identification number project was rolled out. Some lawyers and social activists argue that the Aadhaar project is plagued by problems around privacy and security.

Given India’s 1.3bn population, Aadhar is believed to be not only the world’s largest unique identification project, but also the world’s largest database of demographic and biometric information. Participants must provide their photograph, finger print and iris scan in addition to their name, date of birth and address in order to obtain an Aadhar number. Earlier in April, India’s biometric database passed the 1bn members mark.


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About Alexandra Katz

Originally from St Petersburg, Russia, Alexandra Katz is based in Mumbai, India. She has more than 10 years of experience as a reporter and editor, and specialises in business, sustainable development, policymaking and social issues. She previously worked in Russia and Bangladesh, and recently completed her second Master’s degree in Political Science at the University of Mumbai

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