Whither Aadhaar after 4 years and Rs 3,500 crore?

...especially now when it is delinked from LPG subsidy? Has anybody benefited at all from one more layer of hassle?


Pratap Vikram Singh | February 13, 2014

Even as citizens feel the unique identification number or the Aadhaar programme has added just another layer to the existing identification process and criteria for accessing services, a leading economist, who earlier headed the planning commission’s working group which proposed UID, has said that the ambitious programme is a diversion from the recommendations of the expert group.

According to Dr Arvind Virmani, “The UID as envisaged by the commission’s working group and given concrete shape by the ‘process committee’ was to ensure that every potential or actual recipient of government welfare programs had a UID.” The commission then was deliberating on assigning unique ID numbers to the BPL population.

Though UIDAI made biometric compulsory for issuing a UID number, Dr Virmani, in an email interaction with Governance Now, said, “We did not recommend that. We thought it may be needed to eliminate issue of duplicate IDs to some people. We had recommended that only the minimum information needed for issuing unique ID (UID) be collected, even as biometric was not ruled out.” Several civil society oganisations and civil rights groups have questioned the government’s move to go ahead with its biometric collection programme without taking consent of parliament. The collection of biometrics of residents always runs the risk of profiling and tracking.

Dr Virmani added that the objective was not only to reduce leakage but also to ensure that any poor person who was not receiving any benefit got it. Any connection to payment of benefits was expected only after the “missing” poor and hungry were identified.

The government set up the UIDAI in 2009 as a body attached to the planning commission to issue 12 digit unique identification number to all residents after capturing their demographic and biometric details. The authority aims to offer a digital authentication platform to authenticate, anytime, anywhere.
Unfortunately, after four years and an expense of Rs 3,500 crore, the Aadhaar card is just another identification document, which now has to be bundled with other supporting documents while applying for a bank account, ration card and scholarship, among others. It’s another layer of identification and criteria for accessing services.  

This is what Seema, who lives in one the narrow lanes of Raghubir Nagar, a resettlement colony near the upscale Rajouri Garden in west Delhi, told this correspondent. “Previously the authorities asked for the ration card, voter ID and electricity bill as supporting documents. Now they also ask for Aadhaar as the fourth document,” she said. She had to submit these documents to the respective authorities while applying for scholarship (on behalf of her children) and ration card. That has also been the experience of several people in the Raghubir Nagar and Seelampur.

Rajesh Pandit, 37, a Raghubir Nagar resident, narrated his story while he went to a State bank branch to open a bank account with the help of Aadhaar in November. “When I went to open an account with the branch, the bank manager asked for a proof of identity and residence. I gave my Aadhaar, but he said I should also have a PAN, or electricity bill or a ration card.” Harassed, he approached a tout, gave him Rs 250 and got a PAN card. He wonders whether banks will still refuse to open an account.

“It was a mistake to connect UID to bank accounts right from the start,” said Dr Virmani. In Delhi the relative coverage of banking is still on a higher side. Given the large section of population without bank accounts, this multiplied the difficulty of reaching those poor and hungry who do not receive any benefit, he said.

Aadhaar is in principle a good idea, but it has to be a one-stop-shop for residents, says professor Dipankar Gupta, a leading sociologist, adding, “What’s the point of spending so much on the programme if people still have to provide a number of documents to service providers?”

While the authority is close to generating 60 crore Aadhaar numbers by March as per its initial mandate, doubts and dilemma relating to the clear purpose, role in service delivery, outcome, mandatory or optional nature, privacy and data security aspects remain.

Eyeing political dividends, the government linked Aadhaar with direct benefits transfer (DBT) in late 2012, and finance minister P Chidambaram famously called it a game-changer. But the strategy backfired. On January 30, the cabinet committee on political affairs decided to put on hold the direct benefits transfer of subsidy for liquefied petroleum gas (DBT-L).

The programme created hassles for consumers, as many of them didn’t receive subsidy payments after buying the LPG cylinders on market prices. While it may not hurt the higher and middle income group, shelling Rs 1,200 (in Delhi) for a cylinder created a hole in lower-income group consumers’ pockets. The cabinet’s decision was a major setback for the UIDAI, as the DBT-L was the only programme wherein government had made Aadhaar mandatory for availing the subsidy.

Under the DBT-L, consumers pay the market price—which varies from Rs 1,000 to Rs 1,300 depending on the import price and the tax structure followed by respective states. After Aadhaar is linked to the bank and LGP database, the government transfers Rs 435 as in imprest amount when a consumer books a cylinder. This amount, however, is taken back by dealers when consumers discontinue the LPG connection. The government provides the actual subsidy, which could be between Rs 450 to Rs 800, only after information related to delivery of the cylinder is fed into the system by the dealer.

Though consumers earlier paid between Rs 400 and Rs 450 for buying a subsidised LPG cylinder, they now end up paying Rs 600 (this could go to Rs 800 depending on the international market) from their own pocket. Moreover, if the payments are delayed, it puts pressure on consumers’ pocket.
Take the example of E Raja Goud, who works as an analyst with a commodities market research firm in Hyderabad. The Andhra Pradesh capital belongs to the initial group of 20 districts where the DBT-L was launched in June and the cooking gas cylinders were sold on market price from September. Goud told this correspondent over phone that though he had bought two LPG cylinders in November and January, he hadn’t received a single penny yet. The 27-year-old had to pay Rs 1,050 both times.

“When I ask my (LPG) dealer, he says it will take at least couple of months,” Goud said. He said that even his landlord and some of his office colleagues haven’t received the subsidy payment. Previously, consumers approached only the dealer. Now they have to deal with three bureaucracies—the LPG dealer, the bank and the UIDAI.

As for putting DBT-L on hold, an official formerly with the UIDAI blamed the government itself. “If the government wants the programme to succeed, it will succeed. If it wants the programme to fail, it is bound to fail,” said the officer, speaking on condition of anonymity.

By mid-January, the DBT-L was rolled out in 291 districts. Subsidy to the tune of Rs 2,800 crore was transferred to 1.9 crore consumers (there are 14 crore LPG consumers) since the launch of DBT-L on June 1. For DBT which covered 27 schemes related to pension, scholarship and other social security payments, Aadhaar was made optional, and going by the numbers, it’s a no show. Though the scheme was launched in January 2013 only Rs 500 crore has been disbursed so far. This owes much to the poor Aadhaar and banking coverage.

Though experts agree that the DBT-L is a good initiative and would help the government save thousands of crore in terms of subsidy leakage, Aadhaar has a limited role to play. They further argue that though Aadhaar can help in eliminating ghost beneficiaries from the database, but it does not cover the case of several connections in the same family. According to sources in the oil marketing companies, most of the savings came from the inter-sharing of databases among the oil marketing companies.

The great Aadhaar slide


  • Yashwant Sinha-led parliamentary committee on finance objected to the very purpose of Aadhaar programme and said the bill was unacceptable in its present form
  • Supreme court in September 2013 passed an interim order, saying Aadhaar could not be mandatory for accessing various services. It also objected to the issuance of the 12-digit number to illegal immigrants
  • Early in December, the intelligence bureau (IB) objected that the numbers were issued without checking the veracity of the individual’s address. It said the authorities needed to be more cautious in considering Aadhaar as proof of residence in conflict areas such as Kashmir and the northeast
  • One of the software service providers to UIDAI receives fund from In-Q-Tel, the not-for-profit venture capital arm of the CIA, according to a media report

Dr Virmani recalled that several CMDs of the oil marketing companies had told him that they had enough information on their records to separate LPG cylinder delivery from subsidy witout any need of UID, if they were given a clear mandate to do so!

Optional or mandatory
The UIDAI, on its part, has always been proposing that the Aadhaar number is voluntary and it doesn’t ensure any entitlement. The user departments, however, have been making Aadhaar mandatory for service delivery, till the supreme court’s September 24 interim order that categorically said that no one should be denied of any service for want of Aadhaar.

The interim order came on a petition filed by former Karnataka high court judge KS Puttaswamy. The mater is sub judice.Experts believe that the nature of Aadhaar should have been debated in parliament, something which is now being done by the supreme court. For Justice RS Sodhi, Aadhaar is a tool to deliver benefits at people’s door step, but questions like mandatory or optional, all residents and residents minus illegal immigrants, collection of biometrics and privacy safeguards should have been debated in parliament. After four years, the national identification authority of India bill, introduced in 2010 to provide statutory backing to Aadhaar and bring clarity on its several aspects, is unlikely be tabled in this extended winter session.

Responding to the first draft of the bill in 2011, the parliamentary standing committee on finance headed by BJP’s Yashwant Sinha, questioned the very purpose of the Aadhaar programme and raised questions relate to privacy, data protection, enrollment of illegal immigrants, among others.

The privacy concerns
On the ground of privacy, liberty and freedom, European countries including the UK and Germany have abandoned biometrics-based national ID programmes. While there were no public discussions over the project, the government has been indifferent to demands for a stronger privacy law, which ideally should have preceded the Aadhaar programme. As of now there are no safeguards if the resident’s data is compromised or Aadhaar is used for illegal profiling.

“The government is doing surveillance in the name of development,” said professor MSS Pandian who teaches at the centre for historical studies, Jawaharlal Nehru University (JNU). Why should the state have residents’ biometrics, questioned Pandian. “When a third of the country is witnessing insurgency how can the government claim to map every single resident,” he asked.


  • January 2009: UIDAI was notified
  • December 2010: First NIAI bill introduced
  • December 2011: Yashwant Sinha-led parliametary panel rejected the bill
  • September 2013: Supreme court’s interim order said Aadhaar can’t be mandatory 
  • October 2013: Revised bill was approved by cabinet
  • February 2014: 56 crore Aadhaar numbers generated; expense: Rs 3,500 crore

The Nandan Nilekani vision remains blurred
In his book ‘Imagining India’ (2009), under the sub-head, ‘from subsidies to direct benefits’, Nilekani writes, “Across our creaky subsidy distribution systems, leakages average 50 percent and more. The inefficiency of these state schemes has gotten even worse over the last two decades: in the 1980’s Rajiv Gandhi had earmarked that for every rupee spent on the poor, only 15 paise reaches them; in 2007 his son, Rahul, offered his own estimates, saying that now a mere five percent of every rupee spent reaches the poor in some districts.”

Putting emphasis on the need for a ‘single citizen ID’ and linking it with subsidy and social security payments under several government schemes, he says, “Lack of unique ID has given space to lot of phantoms—in voter lists and in below poverty line schemes and holding back accounts with multiple PANs…. creating a national register of citizens assigning them a unique ID and linking them across a set of national databases like the PAN and passport, can have a far reaching effects in delivering public services better and targeting services more accurately.”

While it is hard to speculate on the future of Aadhaar, people’s concerns about the programme remain. In Seelampur of Delhi, 55-year-old Liaquat Ali, who migrated to the national capital some 25 years back from Lucknow and has a business of wooden furniture, explains how he perceives Aadhaar. “For us the having an Aadhaar card has become a must. But we haven’t benefited. Perhaps the government has… they now have a database of all residents. They now know.”

The future of Aadhaar will be shaped by the final verdict of the supreme court and how politically lucrative Aadhaar seems to the new government.

(This story appeared in the February 16-28 print issue)



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