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A unique number for every Indian

AADHAAR: How a digital identity could really get money to the poor and help you get your passport faster. Samar Halarnkar, Editor-at-Large, Hindustan Times, writes. Forecasts for the next decade

columns Updated: Jan 01, 2011 01:42 IST
Samar Halarnkar
Samar Halarnkar
Hindustan Times

I have a few minor problems. I cannot buy a new car, renew my driving licence or passport. To do all these, I need “proof of address”. I don’t have that. My car is registered in my wife’s name in Mumbai. The passport has my parents’ address in Bangalore. I rent a house in New Delhi, but the lease is in my company’s name. In other words, my identity is suspect.

Without an address, I cannot prove to the Indian state that I am who I say I am. Unlike millions of Indians, my lack of identity does not threaten my existence and immediate livelihood. I do not need subsidised food, a midday meal or health and nutritional services for my daughter, a job in rural India or an old-age pension.

Forecasts for the next decade

However, a tribal from Jharkhand who migrates to Delhi loses access to all these services because she cannot prove that she is who she says she is. Moving a ration card from Palamu to Palam Vihar is the bureaucratic equivalent of travelling to the Moon — it’s virtually impossible for most uneducated, illiterate, unconnected people to do.

Now, what if that tribal could go to any ration shop in India, read out a 12-digit number, scan her finger or eyeball and have her identity instantly authenticated by a remote computer database?

Another linked computer system would register the grains released to her and perhaps yet another move the money from the Centre to the state — all within seconds. This is what the unique identity (UID) or Aadhaar (Support) Project promises, the foundation to recreate life for the millions.

If people are the real wealth of a nation, India gets a particularly bad return on its investment of 1.2 billion people. We have more malnourished children than any other country — one in every two. We have more poor people than any other country — more than 455 million survive on $1.25 a day, or less than Rs 60.

India’s supercharged growth, an average GDP surge of 6.8% every year for the last 18 years (a figure that is projected to hit 9% in 2011), has indeed lifted millions from poverty. The ratio of poor Indians, as currently measured, has fallen from 52% to 28% in 30 years.

Even if you dispute poverty measurement — as many do — there is little dispute that India’s great economic leap has infused a can-do surge of aspiration. If there is one thing that emerging India knows well, it is this: Today’s poor are tomorrow’s middle-class; today’s middle-class are tomorrow’s rich.

At the top of the pyramid, there’s a lovely view of the new India. You will see lots of yesterday’s middleclass, all those happy people who now vacation in Paris and mostly fly first class. So it should come as no surprise that the number of millionaires (yes, in dollars) in India rose 51% in 2009, according to the latest world wealth report released by Merrill Lynch and Capgemini. That’s the highest rate in Asia after Hong Kong, a good place for a reality check: India’s 1.2 billion people have in their midst about 1.4 lakh millionaire households; Hong Kong, with 7 million people, about as many as Bangalore, has 2.5 lakh millionaire households.

Aspiration is strong motivation for those at the bottom of the pyramid. The problem is, far too many Indians are so severely disadvantaged that they cannot even hope to aspire. There are also strong indications that the pace of poverty reduction is slowing and that millions cannot cope with the demands of growth. In 1981, some 420 million Indians survived on $1.25 a day. That figure has now risen by at least 25 million, according to government data.

This imbalanced growth has spurred India’s new politics of inclusive growth and ever-rising expectations, exemplified most recently by the sweeping re-election in December of administrative reformer Nitish Kumar, the chief minister of one of India’s poorest states. In a state firmly in the third world, Kumar got the basics right — he pushed for the empowerment of women, built roads, cracked down on crime. His victory provides new impetus to the imperative of inclusive growth.

There’s no shortage of money or programmes to provide this safety net for the poor. India has a variety of schemes that — theoretically — offer the poor help from cradle to grave. Many are the world’s largest such interventions, including the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), the Integrated Child Development Services and the Public Distribution System.

Over the last decade, Indian spending on social welfare grew nearly five-fold, rising from $9 billion in 2000 to $42 billion in 2010. Over the next five years, India will spend $250 billion on services for the poor. The big problem is, about $100 billion of this, if unreformed, will be stolen, filched or otherwise wasted.

The latest example of how this happens comes from a report on the public distribution system for subsidised grain, released this month by commissioners appointed by the Supreme Court. The commissioners found grain and money being stolen at every level, by officials, grain dealers and other middlemen.

About 58% of the Rs 55,578 crore that the government will spend this year on subsidised food will never reach those who need it. At least 20 million ration cards for subsidised food are in the names of ‘ghosts’, people who don’t exist. The Indian state is writing cheques that the poorest cannot cash.

So India’s poverty and misery endures, and its grand welfare state is a state of collapse, all because it is so hard for the poor to prove who they are. This is why more than 300 million people who migrate internally must often forgo benefits because their identity — in the form of a ration card — cannot move as quickly as they do.

It is to address this mess that former Infosys CEO Nandan Nilekani is working to provide 600 million Indians over the next four years with a 12-digit unique identification (UID) number that will prove identity across the country. It should also be the start of national social security reform, of clearing out the ghosts, surrogates and other anomalies stopping money from reaching the bottom of the pyramid.

But the UID is no magic wand. It is a number that will be useful only if various government departments, thus far wary about losing authority and power over finances, reform their bureaucracies and introduce transparent, computerised systems.

Technology is a vital backbone. To be truly revolutionary, the UID must work in real time, providing instant confirmation of identity to that tribal from Jharkhand who migrates to Delhi and the homeless man in Visakhapatnam who lives below a mango tree and so cannot register for a ration card.

This will require a national broadband network that reaches into every panchayat, a task given to Sam Pitroda, the Prime Minister’s advisor on national information infrastructure. His target is to have such a system running in three years, but the massive network is still being conceptualised.

Even as the technology falls into place — given India’s infotech prowess, there is no reason it should not — there are other largescale changes needed, such as providing basic bank accounts to the poor, so that a variety of payments can be made directly to them, cutting out official and other middlemen. The government can save enough money to boost social spending by 25% by channelling cash via bank accounts, says a study from consulting firm McKinsey & Company. Currently, only one in four Indians has a bank account. It’s very expensive for banks to go everywhere, so the Reserve Bank of India has authorised banking correspondents (such as local grocery stores, petrol pumps and cellphone service providers) to use handheld devices that can access the UID database, authenticate identities and make payments to Indians wherever they are. Some such projects are already working, notably in Andhra Pradesh, where MNREGA dues and pensions are so paid.

One major concern that UID still has to address, though, is privacy. With so much private data, could the Indian government succumb to Orwellian temptations? It could. As the Radia tapes show, data held by the government is at risk of being misused.

But if India can address these issues and pull off these formidable tasks, the UID can also be used for a host of other applications up the pyramid, like issuing licences and cellphone connections. When the UID folks come to scan my fingerprints and iris, I — and India — will be more than ready.

*The views expressed by the author are personal

First Published: Dec 30, 2010 20:05 IST