Citizens' Issues
Public Interest Exclusive
Aadhaar: The story of mistrust and misuse

Biometrics is not the only problem, the enrolment process and authentication systems are also emerging as serious issues with the UID or Aadhaar identification project. This is also forcing banks to search for other alternatives for payment authentication

Lost cards, fake and frivolous enrolments and difficulty in reading biometrics of the really poor on whose name the expensive project was started, are just a few of the issues plaguing Aadhaar, the Unique Identification (UID) number project, the brainchild of Nandan Nilekani. The Unique Identification Authority of India (UIDAI) appears to be happy to enrol more people who already have some identification rather than those who do not have any.

This has evoked strong criticism from a top official from the Reserve Bank of India (RBI). Dr KC Chakrabarty, deputy governor, RBI, in a report said, “Aadhaar was to give ID to people without cards, but it is giving to those who don’t need one. Even if it signs up 500 million people in the next five to six years, and they are all people like you and me, it will not serve any purpose.”

Several poor people, who do not have any ID, are also finding it difficult to enrol for Aadhaar. Many of them, like housemaids and construction labourers, are finding it difficult to provide a clean fingerprint sample. Some could not even submit sample of their iris due to cataract. After failing to provide clean samples for registrations, these people may be deprived the Aadhaar number or enrolled in physically-disabled category. People also have been complaining about the long time taken for registering for the Aadhaar.

According to media reports, even the finance ministry is looking at an alternate system of payment validation. While, the government and the Reserve Bank of India (RBI) has asked banks to accept the Aadhaar number as one of the identification proofs for opening an account, the lenders are not sure about the authentication and verification of these numbers for the payment system. The RBI does not appear to be confident about Aadhaar as it feels that the UID project is not ready for handling secure payment transactions.

Last week, an initial probe by the Infrastructure Leasing & Financial Services (IL&FS) in Hyderabad revealed that its staff indulged in fake enrolments and dispatch of the UID numbers.
Mohammad Ali, a data entry supervisor of IL&FS, told the police that he was sacked in September 2011 and surrendered his login ID and password to his seniors. The company, however, gave this login ID and password to others, who in turn registered about 30,000 people in just six months from 17 enrolment centres in Hyderabad. They even dispatched the letter mentioning the UID number. However, majority of the registrations were fake and UIDAI admitted that it never received any data for these Aadhaar enrolments. Out of these 30,000 enrolments, about 800 were registered under the physically-disabled category, which may make it easy for  a fake user to obtain other documents like a passport.

This is completely in contrast to the UIDAI claims. Earlier in January, UIDAI said, “… based on the analysis, it can be stated with confidence that UIDAI enrolment system has proven to be reliable, accurate and scalable to meet the nation’s need of providing unique Aadhaar numbers to the entire population. It is now safe to conclude that the system will be able to scale to handle the entire population”.
This again may be the reason, why the finance ministry and bankers are searching for other avenues for a payment authentication system. In Mewat district of Haryana, the Department of Financial Services has started its own pilot project for biometric authentication. The National Payments Corporation of India (NPCI) has created routing systems for payments in the pilot project.
Even, the request for proposals (RFPs) issued by State Bank of India (SBI) for enrolling banking correspondents (BCs) in Maharashtra says that the technology solutions can be based on authentication system other than those of UIDAI (Aadhaar, what else?). Bankers, especially, belonging to state-run banks, have expressed reservations about the legality of Aadhaar.

Last year in December, the Parliamentary Standing Committee on Finance, headed by Yashwant Sinha had rejected the National Identification Authority of India Bill (NIA Bill). The finance ministry, the home ministry and the Planning Commission, further strengthening the committee's reservations to the big-ticket scheme, have also opposed the project.

The committee also raised concerns about security, data theft and privacy. “Considering the huge database size and possibility of misuse of information, enactment of a national data protection law, which is at a draft stage, is a prerequisite for any law that deals with large scale collection of information from individuals and its linkages across separate database… The committee is afraid that the scheme may wind up being dependent on private agencies…,” the committee noted in its report.

According to a potential class action suit filed by Bengaluru-based Col (retd) Mathew Thomas of Citizens’ Action Forum and VK Somasekhar, founder-trustee of Grahak Shakti, every day the UID project continues, several crore of rupees of taxpayers’ money would be lost. Apart from this, the continued gathering of people’s data would be an unacceptable security risk both to the people and the nation itself.

“It is respectfully submitted that while millions are dying of hunger, starvation and deprivation be it children, women, men or aged persons, spending such huge amounts of money to benefit and make it possible for many to pocket the money at the expense of the citizen in the name of Aadhaar even without any legislative sanction is illegal. Plaintiffs are affected by the conduct of the defendants and so are many millions of Indians,” said Col (retd) Thomas and Mr Somasekhar in the petition.

Social activist and writer Arundhati Roy, in an interview to the New Internationalist magazine expressed reservation about the Aadhaar scheme. “Imagine a government that cannot provide food or water to its people, a government whose policies have created a population of 800 million people who live on less than Rs20 [about 45 US cents] a day, a country which has the largest number of malnourished children in the world, which has, as a major priority, the desire to distribute UID cards to all of its citizens.”

“The UID is a corporate scam which funnels billions of dollars into the IT sector. To me, it is one of the most serious transgressions that is on the cards. It is nothing more than an administrative tool in the hands of a police state," the activist had said.

The UIDAI is also been accused to make false claims about the reliability of biometrics used in the Aadhaar project. (Read: True lies of biometric technology in Aadhaar enrolment).




4 years ago

How relevant this story has become now in the context of my experience!
As a retired govt. employee, I have a Pensioners' ID card as well as the AADHAAR card (original issue). Confident that my existing connection entitles me to the portability facility, I applied for the same migrated to Airtel on the basis of the aforesaid two documents. Airtel refused to accept the validity of AADHAAR (and ID card issued by the central govt.). As TRAI is NOT accessible, and never responds to any mail, and the authorities do not care whether AADHAAR is accepted or not as a valid document for ID, I requested the PMO to take up the issue to ensure that AADHAAR card is given its proper recognition by the private operators in the telecom arena, with no result. Even for the recent repeat enumeration exercise for the AADHAR project, my existing Aadhaar card was accepted and, as far as I understand and advertised by the Railways, it is a valid ID proof.
As a citizen of this country, it is insulting to me (and to my country) that a private party (that too an Indian entity) would refuse to accept the Aadhaar Card as a legally valid ID/Residence Proof. In fact, the govt. should take action against Airtel for this utter disrespect of the sovereign govt of India. Or, else, the Govt. (i.e., Mr. Nilekani) should explain the legal status of the AADHAR card in the context of the recent statement of Mr. Nilekani and the reports on direct cash transfer (under welfare schemes) on the basis of this card.


5 years ago

The misuse of bio metric identity can be a very serious problem because after that there is no chance that you are punished for what you had not done. Government should think about this seriously cuz it can create some real trouble for anyone and even can help terrorists. Nice read thanks for such a informative article.

Bhamy Shenoy

5 years ago

Every new initiative of far reaching importance is likely to face the kind of problems highlighted in your article. Does it mean that we should not start any new initiative.

The potential benefits from an Aadhaar type program are far more than some of the problems you have highlighted.

Will you be interested to publish my article where I have written why I support aadhaar outlining 10 reasons. Instead of selectively quoting only those who are biased against aadhhar it will be useful and credible if you can also publish the views of those who support it.

Suraj Jain

5 years ago

I have applied aadhar card on 12th June 2011 but still not received. They are just cheating people by taking all the details of a person.

My Enrolment ID/Number : 1216002110002920110612140117

Ram Das

5 years ago

You write, "They even dispatched the letter mentioning the UID number. However, majority of the registrations were fake and UIDAI admitted that it never received any data for these Aadhaar enrolments. "
implying that ILFS dispatched Aadhaar letters and UIDAI did not receive enrollment data of majority of these enrollments.
Both of these charges are misleading at best and lies at worst.
UIDAI has never claimed that it did not receive the data. In fact, it is UIDAI's internal system that flagged this fraud after issuing Aadhaar numbers. All Aadhaar letters were sent by UIDAI through its normal process.

Your write, "The UIDAI is also been accused to make false claims about the reliability of biometrics used in the Aadhaar project". You cite Mr. David Moss. Anyone can accuse anyone else. But it is the responsibility of a good journalist to separate false accusations from the valid ones. You will find that Mr. Moss does not provide any tangible evidence to show that UIDAI report is inaccurate. Please check with any biometric experts for validity of UIDAI report which was prepared with help of biometric experts and not lawyers like Mr. Moss.


Team MLD

In Reply to Ram Das 5 years ago

ARe you representing IL&FS? If yes, please be open about it. We have a lot of questions to ask them about a string of projects in physical and IT infrastructure that they have handled over the years. This goof up is just one of them. Please tell us if should email you questions about IL&FS or put them up in public domain for your responses.

Ram Das

In Reply to Team MLD 5 years ago

Team MLD,
I know you will be disappointed to know that I have to connection to ILFS or any other enrolling agency. If you read my statements accurately, you will notice that I am not defending ILFS.
I am simply pointing out that you are mixing facts and personal opinions. UIDAI has accepted that all of the enrollments were sent to UIDAI. This is precisely how they detected the fraud.
Please accept error in reporting when it occurs.


In Reply to Ram Das 5 years ago

If you have personal problem with Moss, then let it be. Here is another expert, a renowned security expert......
In an essay published at, security technologist and author Bruce Schneier, says, "As long as privacy isn't salient, and as long as companies are allowed to forcibly change social norms by limiting options, people will increasingly get used to less and less privacy. There is no malice on anyone's part here; it is just market forces in action. If we believe privacy is a social good, something necessary for democracy, liberty and human dignity, then we cannot rely on market forces to maintain it. Broad legislation protecting personal privacy by giving people control over their personal data is the only solution."
Before commenting kindly read this article first...


5 years ago

"Mohammad Ali, a data entry supervisor of IL&FS, told the police that he was sacked in September 2011 and surrendered his login ID and password to his seniors. The company, however, gave this login ID and password to others, who in turn registered about 30,000 people in just six months from 17 enrolment centres in Hyderabad. They even dispatched the letter mentioning the UID number. ". WHAT IS MEANT BY SURENDERING THE LOIN ID AND PASSWORD. TO ALL THE FELLOW PPL. THERE IS NO SUCH THING IN UID ENROLLMENT. LOGIN ID IS THERE. BUT THE PASSWORD OR EQUIVALENT TO AUTHORISE AN ENROLLMENT IS THEIR OWN FINGERRINT. SO IT CANNOT BE COMPRIMISED.. OR ATLEAST NOT SO EASILY. SECONDLY, ISSUE OF AADHAAR IS DONE BY UIDAI AND NOT BY ANYONE ELSE. SO WHAT FAKE?? WHO DESPATCHED THE LETTER?? DEAR EDITOR, PLEASE LEARN WHAT S BEHIND, BEFORE PUBLISHING SOMETHING TO THE PEOPLE..



In Reply to aradana 5 years ago

Dear Aradana,
Thanks for your comment. Unfortunately you appear to not understanding the context. Mohammad Ali was employee of IL&FS, which was assigned the job as registrar to enroll people into Aadhaar by the UIDAI. Many data entry operators, who were enrolling people in the UID scheme are required to use login ID and password to use/operate their system and the enrolment software. Secondly, although UIDAI is supposed to have assigned the Aadhaar number and dispatched the letter, here in this particular case, Mr Ali and IL&FS did the job. Isn't this a serious issue?
Thanks again,
Moneylife Team


5 years ago

Thanks for this article. Having sunk hundreds of crores of rupees of the poor taxpayers, just to satisfy the ego of a highly connected but disgruntled person, the bogus scheme is now proved to be all false. And, meanwhile, the contractors who were awarded the job of doing this work, have made their money! So many IAS officers have made repeated study tours abroad to study their systems, like the people connected with PAN of the IT deptt., considering the fact that anyone can any number of PAN cards in any place without ever being caught by the corrupt officers who just want their bribes!

When will the bureaucracy acquire some dignity?

Economy & Nation Exclusive
Minister shows LIC in good light using outdated data

The minister for state for finance told parliament that LIC made a profit on PSU investments until 31 March 2012. It has certainly racked up big losses since then

Namo Narain Meena, the minister of state for finance, told the Rajya Sabha in response to a question that Life Insurance Corporation of India (LIC) has made a profit on its investments in public sector undertakings. Let’s look at how wafer-thin this profit was and what has happened since.

According to Press Trust of India (PTI) release, the minister said, “the book value of the total outstanding investment as on 31 March 2012, was Rs59,116.36 crore and its market value was Rs59,851.16 crore.” This means that even on that day, the investment was barely above water with a notional capital appreciation of barely Rs730 crore on this massive portfolio.

Now here’s what has happened since. The Public Sector Unit (PSU) index of the Bombay Stock Exchange (BSE) has fallen sharply by 5.36%, from 31 March 2012 till 8 May 2012. If the value of LIC’s PSU holding has fallen by around 5%— it would have been Rs 56,641.34 crore on 8th may. The PSU index was 6,711.27 on 11th May, which, if subtracted from the 31st March market value, LIC’s holding would be approximately Rs54,937.97 crore.

The Rajya Sabha question is especially pertinent in view of the widely held perception that LIC suffered losses in the ONGC disinvestment. During March, the government had raised Rs12,767 crore through auctioning of Oil and Natural Gas Corporation (ONGC) shares, and LIC had subscribed to a huge chunk of the issue. While the ONGC share sale was subscribed 98.30%, LIC had picked up over 84% of the shares on offer. This move has been controversial and attracted a lot of flak from the investment community.

Mr Meena said, “the amount of money invested by LIC in ONGC till 31 March 2012, is Rs20,493.60 crore. The value of this investment as on 31 March 2012, is Rs21,752.91 crore.” Which means that the value of ONGC shares held by LIC were barely above water even on 31st March. The share price had dropped 3.44% until 8 May 2012 on which the minister answered the parliament question and the investment value further fell to Rs21,004.21 crore by then. This means that the value of ONGC shares held by LIC would be around Rs20,723.45 crore on 11th May, if one were to deduct 4.73% from the 31st March market value.

The balance sheet of LIC, as of March 2011, stood at a whopping Rs12.82 lakh crore. But market circles point out that PSU stocks and ONGC are not the only questionable investments made by LIC. It also has a huge exposure to private sector entities in aviation, power generation & distribution and telecom, which have been seeking repeated restructuring of their loans.

There are frequent allegations that LIC buys and sells the shares of private sector companies in a manner that benefits their promoters. Questions about the sale and purchase of Reliance Industries’ shares have been making the rounds of the email circuit and there are demands that LIC must be forced to disclose all big ticket purchases which are directly from entities connected to corporate houses.




5 years ago

godavari tour packages are available

Management’s tales and quarterly earnings

Markets tend to be sceptical about good news, which partially explains the muted reaction to this quarter’s positive earnings numbers. Bad news, on the other hand, is considered far more credible

As earnings season in the US winds down, investors might be feeling rather optimistic. It seems that companies, especially US multinationals, have again exceeded expectations. Over 79% of them have posted earnings per share that beat analysts’ forecasts. This is an exceptionally high number of ‘beats’. It is on a par with the record set for the third quarter of 2009. It is also far better than the average ‘beats’. In a typical earnings season over the past 20 years just 62% of companies exceed analysts’ predictions. The question is why?
It is easy to understand why companies would beat expectations in 2009. The global economy was just beginning to recover from the disaster that started in the fall of 2008. The financial community was reeling from a brush with catastrophe. It is reasonable to expect cautious forecasts. The present number might be harder to explain.
One possible reason was that the pre-earning guidance provided by companies in the first quarter was very negative. Companies cutting their guidance outnumbered companies increasing it by two to one. The last time this happened again was in 2009, but in the first quarter when the global economy was falling apart. With companies issuing negative signals, the low estimates were predictable.
With such distortions we might suspect that managers were intentionally massaging their guidance. Certainly they have large economic incentives to do so. Convincing the market that the company is doing better than anticipated often results in a rise of the stock. Since many executives are also compensated in stock, a bit of a boost never hurts provided that the market actually believes you. This season it was more sceptical. Exceeding analysts’ estimates usually results in a 1% rise in share prices. This time stocks only rose 0.5% for a ‘beat’.
One of the economic incentives to manipulating expectation is not so much to create dramatic surprises, but to create a sense of stability. According to a recent survey, 96.9% of CFOs (chief financial officers) prefer a smooth earnings path. A nice earnings graph without spikes or troughs can mean less perceived risk which translates into lower costs for capital, better credit ratings and more credibility with investors.
This is especially true for firms which can present earnings as exhibiting a pattern of consistent earnings growth. The core competency of Jack Welch, the former CEO (chief executive officer) of GE, was manipulating earnings. His reputation and fame are based on his skill at being able to ‘manage’ quarterly earnings. He was able to deliver 15% earnings growth every quarter for many years.  Not only did he deliver consistent growth but also managed to slightly exceed expectations.
Corporate guidance is a perfect example of asymmetric information. Management has it and you don’t. So one of the ways that quality corporations can increase their value is to signal their ability to consistently forecast and achieve growth. This increases their reputation relative to competitors and other players. Companies with the best reputations, for example those on Fortune’s America’s Most Admired Companies list, are more likely issue more frequent and more precise forecasts than do other companies. The most admired company, Apple Inc, has missed estimates only once since 2007.
The credibility of guidance depends not only on the reputation of the company but also upon the type of news itself. Good news is treated by the markets quite differently from bad news. Markets tend to be sceptical about good news, which partially explains the muted reaction to this quarter’s positive earnings numbers. Apparently the market suspects management’s motives.
Bad news, on the other hand, is considered far more credible and the market has a much greater reaction. Although the likely credibility is equal for both types of news, bad news can push a company’s stock down by as much as 10%. Since the management realizes that bad news has a greater potential to spark a selloff, the incentives are greater to err on the upside when releasing a negative forecast. Perhaps the greater reaction to bad news has more to do the cognitive bias of loss aversion which is people’s tendency to strongly prefer avoiding losses probably twice as much to acquiring gains.
Reducing asymmetry with better disclosure varies a great deal throughout the world depending on the local regulatory regime. Foreign companies listing in New York through ADRs often will voluntarily disclose to increase their reputation. Interestingly disclosure from some companies from the emerging markets of Brazil and India will disclose more than companies from more developed countries. Firms from Denmark, Finland, Greece, Hong Kong, Japan, South Korea, Portugal, and Spain, do not issue any guidance. Firms from Israel, India, Norway, Singapore, and the Philippines issued both more often and more accurate.
Perhaps the inaccuracy of companies’ guidance last quarter has less to do with motives than the world economy, which due to massive interference by unpredictable governments, is far simply harder to predict.

(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected]).


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