To fight corruption at the lower levels and eliminate role of middlemen the central government has introduced the unique identity number, Aadhar, in the delivery of social security services and subsidy – which, according to an estimate, accounts for Rs4 lakh crore annually. Aadhar, the “magic number”, has been endorsed by the topmost functionaries of the government as citizens’ “right to identity” and a “boon for government schemes”. One of the prime deliverables of an Aadhar enabled services delivery system would be to facilitate the direct transfer of benefits into the beneficiary's account. Benefits through pension, scholarship, employment guarantee programme (MNREGA), public distribution system and subsidy on kerosene and liquified petroleum gas (LPG) will directly flow into the right hands.  

As rightly pointed by the prime minister during the launch of Aadhar enabled services delivery system, in Dudu in Rajasthan, the government  delivers scholarship to 1.5 crore students, old age pensions to two crore senior citizens, cashless health insurance  through Rashtriya Swasthya Beema Yojana (RSBY) to 3 crore families and wages under MNREGA to five crore families. In most certainty, Aadhar integration with these schemes will put a check on the pilferage happening at the delivery level.

Secondly, with the Aadhar number you can access the services from any location irrespective of where you come from. This is huge advantage for people who migrate from one place to the other in search of livelihood. Thirdly, Aadhar will boost financial inclusion. As soon RBI issues notification, which is expected in couple of months, a person will be able to open an account just on the basis of Aadhar , which could be used as a standard KYC (know our customer). This will lead to huge reduction of cost incurred by the banks in customer acquisition. An Aadhar enabled banking will also give big boost to electronic and mobile banking and will facilitate cashless transactions, micro in size, but massive in scale.  

The unique identification authority of India (UIDAI) conducted multiple pilot projects, which has resulted in considerable financial benefits to the exchequer. In one of the pilots, in Mysore, though Aadhar linkage, the cooking gas connections witnessed a dip by 40 percent. In another, kerosene consumption fell by 80 percent, in Alwar. Similarly, pensions’ delivery under five schemes in Aurangabad witnessed savings of Rs 7.7 crore. 

However, despite all successful pilots, the integration of UID with government schemes faces multiple challenges. A latest study on the pilot project on direct cash transfer being run in Delhi for past one year contradicts the government’s assumptions. The study, which was conducted by the Delhi government and United Nations Development Programme, highlights the use of cash (given in place of ration into the beneficiary’s account) for availing private health care services by the beneficiaries. Although the report found that the ration money was not utilised by the beneficiaries for liquor consumption, this may not hold true for rest of the rural India, where many liquor consuming men rarely think twice before using the savings in buying more liquor. 

On a more practical level, the poor telecom network in rural areas is another key challenge in operationalising Aadhar enabled services delivery system. As Aadhar authentication happens online (in contrast to smart cards which facilitate offline authentication), it requires GPRS connectivity, which is still a distant dream in the rural areas in states like Chhattisgarh. 

The integration of government schemes with Aadhar and the monitoring of services delivery system itself requires massive computerisation of the databases and records of the respective lien departments. Unfortunately, it has been quite slow even after six years of the launch of the national e-governance plan, which has allocated more than Rs 30,000 crore for the same. 

Moreover, the perception on integration of Aadhar with social security schemes as a panacea to the challenges surrounding the government spending and services delivery system is too naïve. The application of Aadhar in eliminating corruption in services delivery system has its own limitations. For example, in MNREGA, as rightly pointed out by Jean Dreze, the substantial pilferage happens during the purchase of materials. The wage disbursement, itself, cannot be checked in case of a quid pro quo between the wage earners and the pradhan (elected village head). Moreover, the exclusion of the actual beneficiary and inclusion of ghost beneficiaries is primarily because of wrong identification by the state governments. 

Lastly, the privacy concerns raised by the civil society organisations on centralised data storage and possibility of sharing the same data with other agencies are yet to be answered by the government.