Is Aadhaar being used as a political tool by the UPA government?

The ground-level infrastructure for Aadhaar-linked direct cash transfer is not yet ready. The base for this scheme, the UID project is surrounded with controversies. And yet the UPA government is pushing hard both the UID and the direct cash transfer scheme with an aim to lure voters for next general elections

Aadhaar or the unique identification (UID) number scheme, the United Progressive Alliance (UPA) government's ambitious project is becoming more controversial day by day. First it was a petition filed by retired Karnataka High Court judge Justice KS Puttaswamy and advocate Parvesh Khanna questioning the legal sanctity of Aadhaar, then the UPA's announcement to directly transfer cash in to a beneficiary's Aadhaar-linked bank account from January, which the Election Commission objected to. The latest is that the Police in Mumbai have found an Aadhaar letter with an illegal immigrant from Bangladesh, who had been residing in Gowandi area. This man used the Aadhaar letter for subscribing to several government schemes meant for poor Indian citizens. This also raises big question of for whom the direct cash transfer scheme is being aimed, is it the Indian citizen or residents or simply the voters.
Rush to directly transfer money before the Big Election?
The UPA, under the leadership of Manmohan Singh (Sonia Gandhi, to be precise), was able to retain power at the Centre twice—in 2004 and 2009. With the country slated to go for the next general elections in 2014, the UPA is facing difficulties on several fronts. In this situation, opposition parties and several prominent activists and citizens are raising questions on the intention of the Union government to roll out its ambitious direct cash transfer (DCT) scheme, using the UID or Aadhaar.
The UPA government has announced that from January 2013, residents from 51 districts (excluding eight districts from Himachal Pradesh and Gujarat) would get the subsidy amount, for about 29 schemes, directly transferred into their Aadhaar-linked bank accounts. This would be followed by 18 states that would be roped in the scheme from 1 April 2013 and the rest 16 states from 1 April 2014. As per a press release from Unique Identification Authority of India (UIDAI), as on October 2012, about 23 crore residents have enrolled for the UID and 21 crore have been issued Aadhaar letters. This means two crore residents do not have any info about their Aadhaar numbers.
The UPA government is trying to link Aadhaar-enabled service delivery to various government schemes such as MNREGA wage payments, PDS distribution, payment of social security benefits such as old-age payments and distribution of LPG cylinders. 
Bharatiya Janata Party (BJP), the main opposition party, complained to the Election Commission (EC) about the direct cash transfer scheme, following which the Commission has asked the UPA government to postpone implementation of the scheme in Gujarat and Himachal Pradesh where elections are underway. 
Noting that the Congress had dubbed direct cash transfer as a “game changer”, the CPI (M) politburo said the scheme was “indeed a game changer whose rules are weighted against the poor, in favour of the UPA-II government’s obsessive commitment to cut subsidies to the working people”.
The direct cash transfer would include schemes from ministry of social justice and empowerment, human resources development (HRD), minority, welfare, women and child development, health and family and labour and employment.
Direct cash transfers provide political mileage to rulers
According to a study by the World Bank , voters respond to targeted cash transfers and these transfers can foster support for incumbents, thus making the case for designing political and legislative mechanisms that avoid successful anti-poverty schemes from being captured by political patronage.
“In theory, anti-poverty programs such as conditional cash transfers (CCTs) may play a role in influencing individual political participation—in the form of voting—and preferences, strengthening democratic representation but also producing electoral rewards. For instance, by partly changing the economic circumstances of households, transfer receipts could persuade participant households to exercise their right to vote,” the study ‘Conditional Cash Transfers, Political Participation, and Voting Behaviour’, says.
Change of role by Chidambaram
P Chidambaram as home minister had a different opinion about UIDAI and its Aadhaar. In November 2011, Chidambaram, in a letter to Montek Singh Ahluwalia, deputy chairman of Planning Commission, had stated that the data collected for UID does not meet the criteria laid out under the National Population Register (NPR) with regard to national security. The home ministry even claimed that UID number can be generated without any verification of documents, mandatory for it.
On 16 January 2012, RK Singh, as home secretary, wrote a letter to Cabinet secretary Ajit Seth. Singh said his ministry find it difficult to understand that while UIDAI is willing to accept documents issued by third parties (registrars of UIDAI) at the time of enrolment, it is not accepting data collected by government servants for NPR. “The UIDAI refuses to accept the data from Registrar General of India for de-duplication citing various grounds while it proceeds to collect data itself," he said.
Forward to November 2012, and the same Chidambaram, as finance minister touted the direct cash transfer scheme based on Aadhaar as “game changer”! He even rejected charges that the scheme is being used as prelude to general elections. Insisting that the programme has “nothing to do with elections”, he said, “Elections will come and elections will go. The scheme will be a ‘game-changer from the point of view of ordinary citizens of India’ and its benefits will be long-lasting.” 
What changed during the 12 months for Chidambaram as home minister and as finance minister? 
Direct cash transfers and Aadhaar linked bank accounts
Linking Aadhaar numbers to direct cash transfer is also not without issues. The government is trying to link the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) scheme and Aadhaar, which uses biometric identification, to directly pay money into labourers’ bank account. Experts have repeatedly pointed out that biometric identification for manual workers has a high 20% margin of error as fingerprints of such workers change (some does not even have fingerprints). The problem is similar with senior citizens.
According to Dr KC Chakrabarty, deputy governor of Reserve Bank of India (RBI), only 40% Indians have bank accounts. HR Khan, also deputy governor of RBI, had said that as of June 2012 around 1.88 lakh villages in India were connected to banking system. This also means, residents from about 5.12 lakh villages (if the Aadhaar linked DCT is really meant for such financially excluded regions), are still out of the banking system. In other words, to make the DCT a success, the UPA government need to bring people from these villages into banking system first.
As of now, according to news reports, the government has asked state-run banks to make sure that every household in these 51 districts, where the DCT is going be implemented, have a bank account. This is a huge task and it looks like the UPA government would miss its deadline for implementing the DCT scheme.
Even the Prime Minister’s Office (PMO) has asked ministries to take up implementation of the direct cash transfer scheme on a “war footing” before the launch of the programme on 1st January. The PMO also asked ministries to organise camps to fast pace enrolment under Aadhaar and also have to ensure the beneficiaries have bank accounts linked with Aadhaar numbers.
UIDAI and its partner still claim everything is for “financially excluded”
UIDAI maintained that the mandate for Aadhaar is to provide UID to residents who do not have any kind of identification and thus are deprived from various government schemes. In other words, it would bring people who do not have any identification into the financial system. It was also expected that with this clear cut mandate, others who have some ID proof can opt to stay out of Aadhaar enrolment. But looking at the way Aadhaar is being forced by the government , soon it would become mandatory, unless it is stopped by the Parliament or the judiciary.
Visa, the partner of UIDAI, has launched “Saral Money”, an instant-account linked to an individual’s Aadhaar number. In a release, Visa said, “This unique payment solution specifically targets India’s financially excluded regions and will support cash transfers for subsidies, scholarships and other government disbursements. Phase 1 of the program will roll out in key parts of New Delhi and the National Capital Region with the rest of the country targeted by the end of next year.”
Read it again. Visa says “financially excluded regions” and “New Delhi and National Capital Region” in same release. When asked about it, a company official stated that “The first phase of the program is being rolled out in New Delhi for the benefit of all the financially excluded individuals, the migrant who would have travelled into the region and may not have a valid ID proof to open a bank account. However, the initiative has a larger vision to cover the nation and it's financially excluded regions going forward. The release is capturing both these aspects.”
When asked about selecting Delhi for the first phase of Saral Money, Visa said, “The pilot was rolled out in Delhi because Aadhaar coverage in Delhi was over 60% at the time—so it was an ideal testing ground.”
The payment services and solutions provider, however, sidestepped from answering question regarding “providing benefit to migrants”. Visa said it simply provides its “Saral Money” service on behalf of the banks, once they are happy with their KYC criteria as laid down by RBI (for opening bank accounts). 
In short, the UPA government, the UIDAI and its partners appear to be using the term “financially excluded” to target voters and customers.
When the beneficiary will get actual cash in hand?
The UPA government is pushing forward the direct cash transfer to the beneficiary’s bank account. This means, people will need to reach banks or ATMs for withdrawing cash. According to National Payments Corporation of India (NPCI), at the end of October, there were over 1.04 lakh ATMs in the country. State Bank of India (SBI) and its five units have installed 61,500 ATMs, while private sector and foreign banks put together have about 41,800 ATMs. Co-operative banks and regional rural banks have 1,150 machines. All the banks put together have plans to install additionally about one lakh ATMs over a period of next two years, the NPCI said, noting that this will take up the average to 170 ATMs per million of population from the current 85.
The only problem is that the majority of these ATMs are installed in cities or areas with dense population. Thus, unless banks go out of their way and install ATMs in rural areas, the financially excluded residents have to be dependent on the banks, especially on the public sector banks. For example, a Kalawati from a remote village may end up spending a day for getting the cash for subsidy from her bank, which may be mere Rs100 or Rs200. But then, the UPA government is just sending the cash to her account through Aadhaar, while withdrawing and using it to buy food at market rate is her responsibility! 
One of the pilot projects undertaken by the government for DCT was in Beelaheri village, which is about 130 km away from Delhi. The pilot to replace kerosene subsidies with cash has been running since December 2011. According to media reports, the demand for kerosene from Beelaheri village has come down substantially; however, the beneficiaries are clueless about the direct cash transfers. Villagers visit the ration shop and riffle through the pile of Aadhaar letters looking for their own letter. Pushkar Raj Sharma, a local government official overseeing the scheme in the area has been quoted saying, “The government has begun the cash transfers even to people who have not received their letters.”
Bengaluru-based Col (Retd) Mathew Thomas of Citizens’ Action Forum says, it is ridiculous to hope that cash for subsidies could be transferred using the UID biometric database. “Why is a biometric database required for cash transfer of subsidies? Hasn’t the US been crediting unemployment dole into SSN accounts, which have no biometrics, for over 70 years? UID is for all residents. Subsidies are for citizens. How would a government agency disbursing subsidies or a bank know whether a person with a UID number is a citizen or not? ” he said. 
UIDAI still says Aadhaar is not mandatory
As Moneylife has been constantly pointing out  Aadhaar and its issuer the UIDAI are rapidly exploiting their own mandate. Even today, UIDAI on its website says, “Any individual, irrespective of age and gender, who is a resident in India and satisfies the verification process laid down by the UIDAI can enrol for Aadhaar. Aadhaar number will help you provide access to services like banking, mobile phone connections and other government and non-government services in due course." 
Moreover, UIDAI still says that Aadhaar is ‘voluntary’ and “not mandatory” . The question is then why the UPA government is insisting to enrol every resident in the project?
Some residents from Kalyan in Maharashtra have been complaining that their children are being persistently asked by their school teachers to submit an Aadhaar number or enrolment receipt for reasons best known to the school management only.    
UIDAI is still under heavy criticism for concerns like privacy issues, use of biometrics and the incentives being paid for enrolling more residents. Many voices have been raised against the forceful implementation of the UID project, with most objections focused on concerns over privacy. In addition, the incentive issue will certainly push government employees to enrol more residents by any means, when they don’t know what UID is and how it would affect their lives.
Aadhaar not accepted as proof in many government departments
While the RBI has asked banks to accept the Aadhaar letter as valid proof for opening a bank account, several government departments and private companies refuse to accept the UID. Aurobindo Banerjee, one of Moneylife readers and former chief commissioner of Income Tax wrote an open letter to UIDAI chief Nandan Nilekani  asking about the legal status of Aadhaar and its acceptance as valid proof by mobile operators.
One non-governmental organisation (NGO), Coimbatore Consumer Cause, in a letter to prime minister Dr Manmohan Singh has highlighted several issues of un-acceptance of Aadhaar. It claims that Passport offices, regional transport offices do not accept Aadhaar as valid document.
Private companies may be overcautious and are not accepting Aadhaar letter as valid proof from subscribers, which is right as the onus is on the mobile operators to prove that the subscriber is genuine and it has done the know-your-customer (KYC) checks.
What is preventing the Passport Office from accepting Aadhaar letters is that these letters are being issued to all ‘residents’ and not citizens of India. And passports are meant for only citizens. In other words, for the UPA government any resident with Aadhaar can be converted into voter but the passport office and other such government departments know the difference between citizen and residents. Hope the common sense prevails throughout other departments as well. 
Dayananda Kamath k
1 decade ago
uid was basically introduced to pass on the subsidies to bangladeshis and also to politicians and their stooges. when subsidy given to a few hundred companies and govt departments can not be monitored how subsidies given to crores of indians can be monitored. oil companies were not able to recover the deficit as per the scheme and they were being paid at the whims of govt. how ordinary man can followup the paltry sum given as credit of subsidy is nothing but bribing the voters. once intorduced it can not be withdrawn just like the reservation. it is people of india realise these game plans of these politicians . you are being paid your own money with a substantial portion pocketed by the politicians.
1 decade ago
UID/Adhaar is a basic step in building a reliable database of all Indians. It is definitely going to have a lot of issues and practical difficulties considering the size and diversity of our nation. Nevertheless it is a right step in building a sustainable infrastructure in long run. Expecting it show benefits in short a period is very ambitious. Cash transfer and other associated scheme are to be carefully built on top of UID. They have to done carefully and can give benefits in long term, something like in 5-10 years. The critics and also the government are expecting the scheme to show quick benefits, as quick as Jan 2013. This is the basic reason people are on two sides in this matter. If we think of long term UID is a great initiative. A right step which if followed by several other right ones, can give benefits. If this can reduce corruption in country by at least 10%, think about the economic benefit our nation will have.
nagesh kini
1 decade ago
Now that a lot of money is sunk in,Aadhar is a fait accompli. It is infractous now to question its legal/constitutional validity.
Instead, either the long in use and time tested PAN/Election cards would have been good enough with a little of tweeking.
Now that it has come to stay with PC the FM having withdrawn his earlier reservations as HM, there is nothing to prevent the GOI from mandating it only for Indian citizens, which it rightly ought to be. This major flaw needs to be rectified. Otherwise wrong people, like the Bangla Deshis and other illegals will hold cards and claim benefits to the detriment of genuine beneficiaries.
What is mysterious is why ground level infrastructure was not put in place right from the beginning and was it allowed to turn into a major bottleneck at the implementation stage now.
The selection of the locations for the pilot roll out appears to be flawed - when the desperate need is to reach out to the real rural Bharat, going to hamlets closer to metros like the NCR makes it politically incorrect as a suspected vote catching device.
All the systemic concerns pointed out by various knowledgeable civil society members need to be addressed to make the entire system really workable.
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