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An exercise in puffery

By Gopalakrishna Feb 9 2018, 1:46 IST

One must accept a continuing divergence between approved and conditioned belief and the reality. In the end, it is the reality that counts. - John Kenneth Galbraith in The Economics of Innocent Fraud.

If you think IT is the solution to your problem, then you don't understand IT, and you don't understand your problem either." - Roger Needham, British computer scientist.

At the recent Global Conference on Cyberspace, Prime Minister Narendra Modi said, "I am sure most of you are already aware of Aadhaar, which is the unique biometric identity of a person€Through better targeting of subsidies, the JAM (Jan Dhan-Aadhaar-Mobile) trinity has prevented leakages to the tune of nearly $10 billion so far."

Sometime back, former head of the Unique Identification Authority of India (UIDAI), Nandan Nilekani, had claimed in Washington that the government had saved about $9 billion by eliminating fraud in beneficiary lists, thanks to the 12-digit biometric Unique Identification (UID) or Aadhaar numbers being fed into a Central Identities Data Repository (CIDR).

These questionable claims about savings from Aadhaar have been widely reported. Such claims have been disseminated without asking the government to provide the break-up of the savings obtained. Most publications publish this sort of claims without verifying the source of the data. Such routine claims are part of the job of a salesman, but it is the duty of journalists to ascertain truth before serving it up to the people at large.

Given the fact that these claims are based on reports of the World Bank, it is relevant to recall the veracity of the Bank's own claims. A World Bank report of 2016 claimed that Aadhaar can save Rs 70, 000 crore annually once it is applied to all social programmes and welfare systems in India. This has been submitted as part of the central government's reply to a writ petition before the Supreme Court.

The affidavit of April 27, 2017, by the government enclosed the relevant portions of the 359-page long World Bank report on 'digital dividends' (at page 195) to underline the imminent savings "through reduce(d) leakage and efficiency gains".

This data of $11 billion refers to page 197 of the Bank's report that is itself based on a 4-page-long 2015 study titled From Cash to Digital Transfers in India: The Story So Far, by one Shweta S Banerjee, who works on the Microfinance Gateway, which is housed at the Consultative Group to Assist the Poor (CGAP). At page no. 1 of this study, it is stated "The value of these transfers is estimated to be Rs 70,000 crore ($11.3 billion) per annum."

It is apparent from the Bank's report itself that it is making a claim about the total value of the money that has been transferred, and not about savings as a result of adopting a direct cash transfer model. The source of data which she has cited in this study has conclusively been established to be questionable, in fact a major goof up. Such claims have been debunked by the Comptroller and Auditor General of India (CAG) as well. If the World Bank's own data has been found to be 'puffery', how can its volunteer's claims inspire any trust?

The Bank has since admitted in writing its blunder. Therefore, it's high time that the Indian government, too, admitted that the claimed savings aren't true. All the ministers, agencies and publications of the government that are reproducing the Bank's faulty claim are guilty, or at least complicit, in this not so "innocent fraud".

Such claims about savings from the Aadhaar project have been insincere from the very outset. The Parliamentary Standing Committee on Finance, in its Sixty-Ninth Report on the 'Demands for Grants (2013-14)' observed, "A provision of Rs 2,620 crore has been allocated in Budget Estimate (2013-14) for UIDAI and a major part of the budget provision for Rs 1,040 crore is earmarked for 'Enrolment Authentication and Updation', out of which an amount of Rs 1,000 crore has been earmarked under the head 'other charges'."

A hazy picture

The total budgetary allocations made for UIDAI since its inception up to March 31, 2014, was Rs 5440.30 crore. As of February 2017, UIDAI had incurred a total cumulative expenditure of Rs 8536.83 crore. This includes undefined "other charges" as pointed out by the Parliamentary Standing Committee. Shouldn't the UIDAI provide the details of the expenses incurred under "other charges"?

Take the case of the year 2009-10, when the budget estimate was Rs 120 crore. The final expenditure was Rs 26.21 crore. In the year 2015-16, the budget estimate was Rs 2,000 crore, but the final expenditure was Rs 1,679 crore; In 2016-17, when budget estimate (BE) was Rs 990 crore, the final expenditure was Rs 877.16 crore up to February 2017. These are details of expenditures so far. Besides this, the Parliamentary Standing Committee wondered in its report as to why inflated targets were consistently being given. It is apparent that there is more to it than meets the eye.

The total estimated budget of the biometric UID/Aadhaar number project has not been disclosed till date despite repeated demands for it while seeking cost-benefit analysis. In any case, unless the total estimated budget of the project is revealed, all claims of benefits are suspect and untrustworthy. How can one know about total savings unless the total cost is disclosed?

(The writer is a public policy and law researcher and Convener, Citizens Forum for Civil Liberties)

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