Government plans to incentivize issue of UIDs to people below poverty line who are beneficiaries of public welfare schemes like the National Rural Employment Guarantee Scheme (NREGS), PDS, Rashtriya Swasthya Bima Yojna (RSBY) etc as per the report of the 13th finance commission tabled in Parliament last month.

The finance commission report recommends a grant of Rs 2989.10 crore to be given to state governments towards incentivizing registration of BPL population for UID. The states may use this grant either to directly assist the intended beneficiaries or create convenient facilities for them such that the cost of registration of beneficiaries is minimal. The report proposes an incentive of Rs 100 per person (Rs 400-500 per family) as adequate for incentivizing residents below poverty line.

As per the report the Unique Identification Authority of India (UIDAI) plans to issue UID to over 600 million residents in India by 2014 through two types of registrars. The first category of registrars will comprise banks, insurance companies, income tax departments and passport offices, with whom the clients will be keen to register. The UID seeker in such cases will be largely above poverty line and willing to bear the cost.

The second category of registrars will be state government departments implementing welfare programmes catering to BPL people. State governments will be required to invest in infrastructure and logistics to collect the biometric data and verify with the Central ID Data Repository (CIDDR). People below poverty line already availing such benefits may not see immediate benefit to register with UIDAI and therefore the proposed financial incentive.

The creation of biometric based unique identity for all residents in the country will help in better targeting of subsidies. The overall central government expenditure on subsidies is around Rs 1,11,000 crore and the state level subsidies are budgeted around Rs 34,000 crore for 2009-10.