The identification system will be synced to the Mahatma Gandhi National Rural Employment Guarantee Scheme in five blocks of the state early next month, Nandan Nilekani, the chairman of the Unique ID Authority of India, said. The state government and banks will use this database to open bank accounts and transfer funds for thousands of beneficiaries under the Centre's flagship scheme.
The authority, tasked with issuing a unique 12-digit 'Aadhaar' number to all Indian residents, is banking on the success of the pilot project to build a case for more funds and wider scale of coverage. It is also hoping to counter recent criticism of its administrative structure and expenditure.
"We have just started a pilot project linked to NREGA in Jharkhand and by next month we will launch the first online authentication system, which can give banks access to the details of beneficiaries online," Nilekani said.
The 'Aadhaar' number will be the key to the holder's personal details and is meant to serve as a single source of authentication for a host of public services. Through this, the authority hopes to check embezzlement of public funds and weed out fake identities.
The result of the Jharkhand project will help authorities decide whether the system can be scaled up and used nationwide for opening bank accounts, issuing of driving licences, ration cards, passports, etc.
"This will also be used to enable payments through business correspondents in NREGA using a biometric authentication system," Nilekani added.
So far, the Reserve Bank of India and the finance ministry have mandated the UIDAI number as a valid "know-your-customer" document for opening bank accounts, but are yet to allow online verification.
The authority, which has enrolled around 110 million people in its systems, is talking to various stakeholders, such as telecom department, to make 'Aadhaar' a valid document to access services.
Nilekani said that three states have recognised the system's identity proof for various government services. "We are trying to make more state governments agree to this," he added.
The authority has come under fire from some government departments over its functioning and spending.
In September, the Registrar General of India (RGI), which is also collecting biometric data as part of its National Population Register, said the data collected by UIDAI's registrar agencies was not reliable, as they were not following the parameters set for the NPR.
The criticism led to UIDAI's demand for 15,000 crore to scale-up coverage being rejected by the Expenditure Finance Commission last month.
"The Registrar General has expressed some reservations on using the data collected by non NPR registrars. That is the only contention which will be resolved by the cabinet," Nilekani said.
The decision on whether UIDAI-appointed registrars can collect data will be taken by the Cabinet Committee on UIDAI.
The UIDAI was also criticised by some sections of the Planning Commission on its administrative structure while the country's official auditor, CAG, initiated a pilot performance audit on the authority on October 3.
"We have resolved all issues and are doing our job. The CAG is doing its job. We have nothing to hide. It's all transparent," Nilekani said.