Feb 08, 2014, 05.24 PM IST | Source: CNBC-TV18
Experts discuss The key question is, if the next government were not actively back Aadhar, has the system created enough mass of benefits for state governments, banks, and the lay citizen to want the scheme to continue?
The unique identity or the Aadhar was one of the high profile projects of the UPA government. By roping in India's smartest technocrat, Aadhar was the UPA's way of using cutting edge technology to transfer benefits in a corruption free manner. But, after five years of backing, last week the government put on hold its program of paying cash on the basis of Aadhar identity to those entitled to subsidised LPG gas cylinders.
LPG was the only instance where Aadhar was used to transfer cash instead of subsidies on a national scale and this discontinuation is a big setback to Aadhar. But, there are bigger dangers bedevilling Aadhar.
The Supreme Court has said Aadhar identity cannot be mandatory to get government benefits. The government in the remaining two weeks won't be able to get a law to mandate Aadhar and worse, the BJP has been saying it prefers the national population register to transfer benefits than Aadhar .
The key question is, if the next government were not actively back Aadhar, has the system created enough mass of benefits for state governments, banks, and the lay citizen to want the scheme to continue.
In an interview with CNBC-TV18’s Latha Venkatesh, Sanjay Jaju, IT Secretary of Andhra Pradesh, M Balachandran, Chairman of National Payments Corporation, a company that ensures cheaper payment systems between banks and Govindraj Etiraj, former editor of CNBC-TV18, who has served one year as a volunteer in the UIDAI, share their views on the future of Aadhar.
Below is the verbatim transcript of their interview with CNBC-TV18's Latha Venkatesh
Q: As a leading bureaucrat who has used Aadhar in your state just tell us to what extent is Aadhar important for Andhra Pradesh government to transfer benefits?
Jaju: Andhra Pradesh is one state which has actually completed the enrolment for the entire population. More than eight crore Aadhar numbers have been generated for our state and rest of the numbers are in the pipeline. We have also setup permanent enrolment centers for residents to come and update their Aadhar status or for the residual population to get themselves enrolled. We are the first state also to start the seeding of various beneficiary databases with Aadhar numbers and we were also the first state possibly to have started the direct benefit transfer (DBT), especially with the LPG, NREGA wages and pensions. We had started to make use of Aadhar as a base for DBT. There were challenges, but I am sure this holds a huge potential and definitely has a future for the country.
Q: To what extent do you use Aadhar?
Balachandran: The day Aadhar became an identity kind of thing, the thought process went to the extent that why not it be linked to the bank accounts, so that any kind of payments that could be made from any source more particularly from government\\'s side could be routed through that number with that as an identification. As far as National Payments Corporation of India (NPCI) is concerned, we are leveraging our national financial switch for routing all the payments which have Aadhar number as an identity. That presupposes seeding of Aadhar numbers in the bank accounts. Today we have about 268 banks wherein this seeding has taken place. We started with a pilot project in Jharkhand in January 2013 and now it has become operational from June 2013.
Q: Approximately how much money or how many transactions? Give me a number as to how many transactions are Aadhar based?
Balachandran: Right now we have about 60 million accounts which have been linked to Aadhar. We have an Aadhar payment bridge as a kind of channel for routing these transactions. Roughly around Rs 2,700 crore have so far been channelized. Every month, in fact in December we had around 11 million transactions routed and January it had gone up to 15 million. What started as a DBT for routing the subsidy for LPG now got expanded to other benefits as well like pension payments, student stipends, so on so forth.
Q: You were telling that it is also getting used by banks for banking correspondence to ensure financial linkages.
Balachandran: Yes, that is another module that we have which is known as Aadhar enabled payment system wherein once the money gets into the accounts of the people either through Aadhar payment bridge or through any other means, now we would like to see that people are able to draw that money through the banking correspondence. For that, we have RuPay as a debit card or ATM card which could be used and the beneficiaries or the account holders go to the banking correspondence.
Q: How widespread is it?
Balachandran: Now around 26 banks have already got themselves enrolled. It is picking up. These people go to the banking correspondence. Use their biometric identification process. Get their account validated through Aadhar number and get the money transferred, that is drawn and even if they have got amounts to be deposited the same system works. Aadhar now as a number identification is used by NPCI.
Q: I get your point that you have been able to have Rs 2,700 crore transferred by the government to intended beneficiaries.
Balachandran: 45 central government and state government departments. 45 departments in the center have been using these kind of accounts.
Q: I want the bigger picture. Where else have you seen the spread of Aadhar?
Etiraj: Aadhar was created for two reasons - one was to give every Indian resident a unique identity, so that is the primary purpose. Of course this identity would be truly portable and mobile which no identity has ever been in this country. Every identity in this country has been linked to either a benefit or an entitlement. Think of the US social security system. It is the only number that you can identify someone with, but it is a benefit or an entitlement that is social security. Similarly in India you have PAN numbers, you have driving licenses, you may have a pension numbers, but it is all a number which is connected to some entitlement or a benefit, so that is the fundamental difference, that this is a unique identity which does not have any property or value attached to it. The second objective was to make this number truly usable and relevant to people in their daily lives, how do you attach some level of functionality to it. That functionality was authentication, i.e. if I go somewhere and if it is attached or gets connected to some service can I authenticate myself? Once you said authentication there were a host of services which was supposed to be for authentication. What you see as DBT is one such authentication application, the way UID defines it and there are many as Mr. Balachandran himself has pointed out. So that is really the background. It could be to get a telecom card, it could be to even open a bank account which has nothing to do with the transaction. So the whole e-KYC product which UID has launched basically allows people to walk into a branch. There are banks like Axis Bank, Oriental Bank of Commerce (OBC), HDFC Bank, they have all started rolling out. You can go to their branch, authenticate yourself with your biometric and then open a bank account. Earlier opening of bank account meant carrying a whole sheet of papers. Balachandran: KYC has been a big challenge, yes. Etiraj: There is authentication. Under authentication comes a whole bunch of applications. Some are to do with delivery of subsidies and benefits. Others are to do with banking. There could be a third element to do with education and a whole bunch of other things which still has to be rolled out as I see it.
Q: In your experience to what extent is Aadhar responsible for the DBT not working, because that was the hue and cry which led to the abandonment of Aadhar being used in DBT?
Jaju: We just heard Mr. Balachandran that more than Rs 2,700 crore have actually being transferred so saying that DBT has not worked will also not be accurate, because amounts have gone. This entire process works on seeding Aadhar numbers in beneficiary databases and this job has to be done by the respective department. Once you seed the numbers then you push those records into the banks and then the banks will ultimately generalise it through the NPCI and then finally the amount gets into the bank accounts. The challenge here has been accurate seeding of Aadhar numbers, which in many cases could not be done and the reason for that possibly was paucity of time. For a project of this nature to rollout you require time, not just to do the seeding, but to verify that the numbers which have been seeded have been done correctly.