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Getting rid of our phantoms

Identity systems linked up with an IT-enabled process that interlinks our various departments would, besides making citizen information and identity more verifiable, make the relationship between the State and the citizen infinitely less traumatising, writes Nandan Nilekani.

india Updated: Jun 29, 2009 22:35 IST

Today Indians can have a multitude of numbers with which to identify ourselves, depending on when and where we interact with the State. When we get a passport we get a passport ID, a ration card gets us another number, when we pay taxes we need a Permanent Account Number (PAN), when we register our vote we get a voter ID card, and on to bar code infinitum. “Our databases are in these disconnected silos,” Chief Election Commissioner N. Gopalaswami says. This makes zeroing in on a definite identity for each citizen particularly difficult, since each government department works on a different turf and with different groups of people. The lack of a unique number has given space to plenty of phantoms in voter lists and in Below Poverty Line (BPL) schemes and in holding bank accounts with multiple PANs. One academic tells me, “The number of BPL ration cards circulating in Karnataka is more than the state’s entire population, let alone the number of BPL families.”

India’s ministries and departments are also quite isolated, with separate fund flows and intricate, over-hyphenated authority levels. As a result, these systems require paperwork-choked processes each time citizens approach the state. A common technology and process platform for government schemes and departments — especially now that they have such large budgets — would be a huge improvement in coordinating information between departments, and getting rid of redundancy and triplicate forms. Identity systems linked up with an IT-enabled process that interlinks our various departments would, besides making citizen information and identity more verifiable, make the relationship between the State and the citizen infinitely less traumatising. Such a ‘national grid’ would require, as a first and critical step, a unique and universal ID for each citizen. 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 far-reaching effects in delivering public services better and targeting services more accurately. Unique identification for each citizen also ensures a basic right — the right to ‘an acknowledged existence’ in the country, without which much of a nation’s poor can be nameless and ignored, and governments can draw a veil over large-scale poverty and destitution.

The use of IT and the rise of such unique number systems are closely correlated. In the United States, for instance, the Social Security Administration (SSA) was the first federal bureaucracy to require the use of computers because of the overwhelming complexity of processing the social security numbers and data of its 200 million-plus citizens. The bureaucracy was a massive complex of wall-to-wall file cabinets managed by hundreds of clerks. It was the early IBM 705 computer that helped transform and streamline it. This mainframe approach quickly spread to European bureaucracies in the 60s and the 70s. The transparency and flexibility of such computerisation also enabled other reforms — such as laws that introduced individual citizen accounts for benefits and welfare payouts, a step which both opposition parties and citizens in Europe and the US would have been deeply suspicious of under the earlier, less transparent and bureaucracy-run system. In China as well, IT has helped the government transform its social security systems from a local network to a national, increasingly interlinked process.

In India, the government has made some attempts towards such a single citizen ID number.... A stop-gap arrangement that the government has put in place requires the PAN as ‘the sole identification number’ during bank transactions. But of course, with just 60 million people with a PAN, this does not come close to a broad-based citizen ID....

Too often though, we see issuing smart cards as the main challenge of implementing such a system. But building these intelligent little stripes is the easy part. It is in making the back-end infrastructure secure and scalable, providing a single record-keeper for the whole country and integrating the agents who issue these numbers that gets tough. To do this, we need a sustained and multi-pronged effort that cuts across governments as well as companies. For example, issuing this number to each citizen, say, during a census would be extremely onerous, as it is a painful task prone to errors as census officials spend long days walking through neighbourhoods and knocking on doors. It would be a lot more effective to issue these numbers when citizens come to the government.

This would mean issuing citizen IDs when individuals come to a public office for an identification document — a passport, birth certificate, caste certificate, driver’s licence — when they come to collect a benefit such as a BPL card or when they have to make a financial transaction, such as pay taxes, open a bank account or buy into a mutual fund. The government can also easily recruit private companies such as telecommunication and financial services firms to become intermediary issuers to their large numbers of customers.

Each of these paths to identifying the citizen and bringing him into the database would cover different pools of people. The PAN covers all tax payers, voter IDs all registered citizens over 18, birth certificates all newborns and BPL cards the poor. Using the databases to issue IDs to different groups of people means that the initiative would ramp up to near-universal, accurate levels very quickly. And if necessary, such efforts can be complemented with a census. A national smart ID done at this level could, I think, be transformational. Acknowledging the existence of every single citizen, for instance, automatically compels the State to improve the quality of services, and immediately gives the citizen better access....

A key piece of infrastructure that must sit on top of an interconnected grid is the electronic flow of funds. This will require that each uniquely identified citizen or organisation has a financial account into which money can be transferred from the State. This could be an account in a bank, a post office or with a self-help group. And within this system, the ID smart card can function as a mobile, non-transferable electronic passbook.

My guess is that the impact on inclusive growth and India’s savings rate from implementing this would be massive, considering that an estimated 80 per cent of Indians today do not have a bank account, and therefore lie outside any sort of banking system besides, perhaps, the one represented by the exploitative moneylender and his steel box of cash. “The weakest aspect of India’s economic reach is in financial access,” Dr C. Rangarajan agrees, “and its impact on inclusive growth has been severe.” For instance, people need savings to invest in education, spend on health care, or to feel secure enough to move to a city, leaving their home and land to take up jobs in a place where they have no real assets.

Linking smart cards to such accounts can open up the banking system to hundreds of millions more people. It also introduces the possibility of offering direct services, from pension and benefit payments to trading accounts to an unprecedented number of people.

This is an edited extract from Nandan Nilekani’s Imagining India: Ideas for the New Century (Penguin India).