Unique Identification Authority of India (UIDAI) has been living in a policy grey zone. The body, headed by former Infosys honcho Nandan Nilekani, came up following an executive fiat when the UPA thought an all-purpose smart card to slash the subsidy burden. However, it still does not have a legal backing, and the UID or Aadhaar is still optional – as reiterated by the supreme court on September 23.

The government, then, has renewed its efforts to grant a statutory status to the UIDAI, and the cabinet on Tuesday approved the National Identification Authority of India Bill, which will be introduced in the winter session of parliament.

A previous version of the bill was introduced in the Rajya Sabha in December 2010, and was referred to the parliamentary standing committee on finance headed by Yashwant Sinha. The panel pointed out several anomalies in it and asked the government to reconsider it.

The new bill, according to a report published in the Mint, has been revised incorporating some of the recommendations of the committee. The bill aims to grant statutory status to UIADI and defines its powers and functions.

The cabinet's nod comes close on the heels of the supreme court order in which it said that the government can't make Aadhaar mandatory for delivering services and distributing subsidy to the citizens. The order shook the "game-changer" scheme of the UPA, the direct benefits transfer (DBT), which is based on delivering cash into beneficiary's bank account based on the Aadhaar number.

The government was in the process of phasing out the selling of subsidised cooking gas cylinder through the delivering subsidy amount based on Aadhaar number of the beneficiary. The ministry of petroleum and natural gas, which is the nodal agency for the implementation of the DBT-L, has disbursed over Rs 470 crore to LPG consumers in 20 districts. The cabinet committee on economic affairs had approved to scale the DBT-L scheme to over 270 districts by January 2014.

Following the apex court's ruling, the petroleum ministry rushed to the court requesting it to make Aadhaar number mandatory for the disbursal of LPG subsidy.

The government hasn’t made Aadhaar mandatory for the DBT for 28 welfare schemes in 121 districts, owing to lack of poor coverage of Aadhaar in these districts.

Some state governments have made it mandatory for citizens to provide Aadhaar number in service delivery including issuance of marriage and caste certificates, disbursal of scholarships and employee salaries. The petition, on which the apex court ruled, cited these instances of Aadhaar number being mandatory in service delivery, while simultaneously stating that Aadhaar enrollment is voluntary.