Aadhaar: India’s great IT identity quest

India is in the midst of the world’s largest single IT project: giving 12-digit personal identification numbers to hundreds of millions of people. But will such a large IT project work?

Large-scale IT projects are notoriously complex and often marred by chaos and failure. So the Indian Government’s attempt to allocate a 12-digit personal identification number (PIN) to around a billion citizens seems little short of heroic.

This PIN number has been named Aadhaar, meaning “foundation” or “support.” As of July this year, around 370 million had already been issued, with 600 million in all to be provided by 2014. Each number will allow its user access to public and private services, such as government food and fuel subsidies, bank accounts and mobile phone connections.

The Unique Identity Authority of India (UIDAI), which is running the project, is collecting biometric information from the country’s population – many of them poor, rural and with no official status – and giving them proof that they exist.

Aadhaar is described as “a random number devoid of any classification based on caste, creed, religion and geography,” highlighting the unique issues faced by projects conducted in such a vast and socially complex country.

The transformative potential of the scheme is undeniable. And in pure economic terms, the International Monetary Fund believes that the direct cash transfers that Aadhaar facilitates between the state and recipients will eventually allow the Government to make savings equating to 0.5% of GDP, in part by reducing the bureaucracy involved.

Access to finance is scarce in poorer parts of India, with 40% of the rural population void of a bank account, rising to more than 60% of the population in the east and northeast. Access, proof of identity and fees – because the transaction costs of the micropayments that poorer people deal in are not attractive to banks – are the three main problems with providing financial services to the poor, and the Government believes Aadhaar can overcome them.

The unique number can help residents establish their identity with service providers, which means that banks should be able to increase their current branchless operations to costeffectively reach a wider population. Reducing reliance on cash transactions should save money, and the UIDAI believes that,
once an Aadhaar-enabled micropayments system is in place, a variety of other financial instruments can also be implemented. These include microcredit, microinsurance, micropensions and micromutual funds.

The idea is that the number, which is valid for life, will eliminate a large quantity of duplicate and fake identities in government and private databases.

Perhaps unsurprisingly, it has not been a complete success. The Government has admitted that large numbers of Aadhaar cards have not been delivered, and India’s banks have raised some questions about how the scheme’s payment technology will dovetail with existing systems – and who picks up the tab in the event of identity theft.

But for all the challenges, UIDAI chairman Nandan Nilekani has declared the process “irreversible.” Although, even he admits that he doesn’t know how long it will take.

The article was written by:

  • Adam Hill

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