Need for a white paper on hidden costs and hyped benefits

On one hand is a section of urban India that drives high end cars, communicates with iPhones and dines at the best restaurants in the country. On the other hand is rural India with a sizeable population that toils in the fields, struggling to earn a living for two square meals a day. The United Progressive Alliance (UPA) government at the Centre concluded that lack of identity amongst rural population and the urban poor was the biggest hindrance to their progress in society.

To bridge income gap and promote inclusive economic growth, the Unique Identity Project otherwise known as ‘Aadhaar’ was created to fulfill the goal of providing a unique 12 digit number to each citizen. Much of the debate on Aadhaar has focused on the merits of the programme but not enough on its costs or implementation. Neither parliament nor the citizens have any clue as to the costs of this mammoth project. Moreover implementation is fraught with myths and misgivings.

Aadhaar does not have a budget or if it does it is yet to be made public. The recent request for Rs 15,000 crore by its project managers to register all citizens over the age of five for its programme has caused ripples in many circles including the government.
Aadhaar was integrated with the home ministry’s National Population Register which was then authorised to collect finger prints of all Indian nationals based on an amendment to the Citizenship Act in 2003. Instead, Aadhaar has started collecting finger-prints without any legal backing. By duplicating the efforts of Census Office, it is only adding to the cost of taxpayers.

Since it has outsourced data collection and provides incentives for such collection, many vendors prefer it over the Census Office. Aadhaar authorities should be transparent in revealing the entire budget along with a cost-benefit analysis for a better understanding of the merits of the project.

A cost-benefit analysis will reveal the true scope of the project, listing all the risks while assessing if costs outweigh benefits. Moreover, citizens need to know if they have to shell out money to update their information once they have registered. It will also inform the public at large of the intended use of information collected by Aadhaar. Speculative cost for awarding identity numbers to a 120 crore people is more than Rs 1 lakh crore.

UID’s Biometric Standards Committee has accepted the fact that for any given population, approximately 5 per cent will have unreadable finger printing. Despite high costs, more than 40 million people can still be without an identity and hence can be denied government benefits that will accompany the UID scheme. If private companies are allowed to use the data, be it in financial or social sector, customers will bear the crushing burden of high transaction costs.

The implementation

As far as the implementation goes, the UID strategy document envisages ID at birth and recommends that children get their finger print and iris updated every five years. The same document suggests adults get their data updated every ten years. Individuals need to go to a government office a minimum of ten times to fifteen times in their life time.

With rapid urbanisation, more people are on move like never before. Not just the poor but people who have transferable jobs like many central and state government officials, bank officers and defence personnel, will face a bureaucratic nightmare to get information changed every time they move to a new address. An added cost to update information will be a double whammy for many. Moreover, the exercise will most likely foment corruption at the lower rung of bureaucracy.

Additionally, Aadhaar is collecting far more information than initially envisaged or told to citizens. Information like LPG connection number, bank account number and NREGA registration number are all sought in the form.

If Unique ID is not mandatory then all such information is moot and has made citizens more suspicious of why such information is being collected. Also, UID of a person is supposed to be linked to more than 100 databases that both central and state governments are operating and it is naïve to think that it will not be mandatory some day.

Aadhaar is being introduced as a panacea to all ills that are plaguing the poor in society. But in its current status, the project is far more intrusive, has many hidden costs and hyped benefits. One of the first actions of the recently elected United Kingdom government was to scrap the Identity Cards Act, thus ending the country’s most ambitious project of issuing unique identity cards to all its citizens. The UK government while abolishing the project citied both the enormous costs of the project and the unlikely event of many of benefits accruing to the people or the government.

A complex and expensive project like Aadhaar has been thrust on the people of India without a debate in parliament and a cost-benefit analysis. A white paper on usage and cost-benefit analysis is required to avoid the project ending up as a bonanza to IT companies and a waste of taxpayer money.