Future Designer, Professor, Thought Leader
Aadhaar came with a lot of promises. They were brought by some of the brightest in India.
Apr 24, 2017, 12.02 AM IST
Aadhaar promises to remove duplicates and ghosts from government databases, deliver subsidies to beneficiaries, collect taxes, provide financial inclusion and eliminate corruption. Here is why it cannot deliver anything it promises.
Aadhaar came with a lot of promises. They were brought by some of the brightest in India.
Promise 1: Removing Fraud and Duplicates
In a recent interview, Nandan Nilekani claimed: “Aadhaar was used to clean up the beneficiary list for government schemes. Using the same argument, if it’s linked, duplicate PANs will go away and tax evasion will reduce. The issue with driving licences is again their multiplicity. In all these cases, Aadhaar is being used to eliminate various kinds of fraud and misuse.”
Contrast this claim with the CAG report No 25 of 2016. The auditor observed in this report multiple LPG connections having the same Aadhaar number or same Bank account in the consumer database maintained by the OMCs. This highlighted that the use of Aadhaar did not eliminate multiple connections. It highlighted that beneficiaries also had access to multiple Aadhaar numbers.
In de-duplication, any two databases can be used for comparison with each other. The output of the comparison would be expected to be a list of records that matched and therefore deemed to be genuine, a list of records where the name matched but address did not and need verification, a list of records that are missing from one but present in the other and therefore deemed to have been excluded from one or likely to be fake in the other.
Promise 2: Delivering subsidy and benefits
Nilekani highlights that “Aadhaar played a big role in streamlining benefit delivery — LPG, kerosene, pensions, scholarships, etc — which proved to be very successful”.
The government’s data on PDS from Rajasthan, Chattisgarh, Andhra and Telangana highlight 38-80% beneficiaries have been deprived of rations. The CAG has observed that more than 4.53 crore domestic LPG consumers could not avail of subsidised cylinders during 2015-16.
Aadhaar actually adds a denial layer through multiple indifferent private parties. Subsidy and benefit delivery is now at the mercy of mobile App developers, iSprit, telecom companies, electricity utilities, the Authentication Service Agencies, the UIDAI and sometimes banking correspondents and the NPCI. Without them the transactions may never happen.
It therefore makes the delivery of benefits and entitlements anything but streamlined or successful.
Promise 3: Collecting Taxes, preventing tax evasion, widening the tax net
Mukul Rohatgi, Attorney General reportedly told the Supreme Court “We have found a number of PAN cards being used to divert funds to shell companies. To prevent this, the only option is to make Aadhaar card mandatory.”
The Minister for State in the Ministry of Finance had informed the Rajya Sabha on 31st March 2007 that the number of persons having duplicate PANs in 13.1 lakhs. This is just about 4 percent of those who filed returns in 2012-13. On 22nd April 2016 the cancelled PAN cards were 11,56,894.
The Minister explained that duplicate PAN cards were allotted due to incorrect data entry, multiple applications by the same person with varying particulars and allotment both on the basis of PAN application and the return of income. Clearly Aadhaar has played no role in identifying duplicates.
The Aadhaar database has entries to ghosts and duplicates including those issued in the name of gods, animals and plants. As already highlighted, the use of the Aadhaar database that has never been cleaned of duplicates and ghosts to create new PAN cards will end up including ghosts in the new database and facilitate the very tax evasion that the government wishes to avoid.
Promise 4: Financial inclusion
Nandan Nilekani describes the “whats-app” moment of Indian banking where “One can visualise a future where every adult Indian has an Aadhaar number, a smartphone and a bank account. Already over 280 million Indian residents have an Aadhaar-linked bank account.”
The Crime Branch of Delhi Police, registered a FIR under sections 409, 419, 120B of the Indian Penal Code and section 66 and 66C of the Information Technology Act against Axis Bank, e-Mudra for actually doing presence less transactions. According to the UIDAI, they used a previously stored biometric to authenticate transactions in the absence of a person. This indicates that Aadhaar banking makes individuals completely vulnerable to frauds.
Raising concerns that Jan Dhan accounts, opened with Aadhaar as the sole KYC, can be misused by “money mules”, RBI had warned in May 2016 they are “very vulnerable” to frauds.
RBI Deputy Governor S.S.Mundra had said that third parties can be used to launder the proceeds of fraud schemes (such as phishing and identity theft) by criminals who gain illegal access to deposit accounts by recruiting them as “money mules”. True to the warnings, the Jan Dhan bank accounts, which are the tip of the iceberg in terms of bank accounts opened with Aadhaar as the sole KYC, had a rise Rs 32,000 crore in Jan Dhan deposits within two weeks of demonetisation. This demonstrated that Aadhaar banking aids criminal activities and money laundering.
Promise 5: Eliminating corruption
Social activist Nikhil Dey says, “The government claims that the Aadhaar card will ensure higher efficiency, greater inclusiveness, and a reduction in corruption. But in Rajasthan, what we are getting are more inefficiency, more exclusion, and more corruption.
In Tonk district, for instance, 80% of the rightful beneficiaries were turned away due to biometric-related issues. In other districts, the inefficiency rate was 60%. Aadhaar neither prevents leakages of ration, particularly from the godown to shops, nor does it deter corruption”. Reetika Khera and Anumeha Yadav have highlighted the corruption in Aadhaar-based biometric authentication (ABBA) leading to siphoning off of the rations far more easily on count of Aadhaar.
Cobrapost and CNN Network 18 have exposed that for a cost between Rs 500 to Rs 2500, “Aadhaar officers” agreed to make Aadhar Cards for applicants without any proof of identification or proof of address. They also demonstrated that it was possible to make multiple Aadhaar enrolments and even multiple cards.
The CAG has already pointed out that the “savings” attributed to Aadhaar are in fact denial of subsidy to more than 4.53 crore domestic LPG consumers. The CAG also found consumers with multiple connections who received subsidy on more than 12 cylinders as well as an advance payment on registration.
A database of unverified and unaudited numbers cannot play any role to weed out corruption. It is corruption to use these numbers to claim they weed out corruption.
The continued use of Aadhaar is contempt of the orders of the Supreme Court when the information about an individual obtained by the Unique Identification Authority of India is used for purposes not permitted by the court.
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About Anupam Saraph
Dr. Anupam Saraph is a renowned expert in governance of complex systems and advises governments and businesses across the world.
