Neither LPG nor any other subsidy leakage would be reduced though the use of UID. All that would happen is untold misery for the subsidy recipient. This is the third part of a nine-part series on the unique identification number scheme and its possible misuse by politicians, bureaucrats and foreign contractors

Tall Claims
It is not possible to deal with all the welfare schemes here for which these tall claims are made. Hence, only the claims about reduction in LPG subsidy leakages are discussed here, as typical of other similar claims. Tomfoolery means absurdity. The adjective aptly describes the UID scheme. UID is a scheme that involves a lot of scheming and schemers. The "Tomfoolery Show" is an American cartoon comedy television series. A really funny and popular, oft-repeated scene in this comic is of a delivery boy running around trying to deliver a large plant shouting, "Plant for Mrs Discobolus". One could find it quite funny to imagine a LPG delivery boy running around shouting, "Subsidised LPG cylinder for Mrs Aadhaary; family line up for fingerprint authentication" in the real-life UID comedy show. Comedy shows provide comic relief.

Unfortunately, while the UID scheme's objectives are laughable, they cannot be laughed off, since, before the scheme collapses under the weight of its own contradictions and falsehoods, it would have brought untold damage to the nation's social fabric and compromised personal security of millions of Indians.

The Unique Identification Authority of India (UIDAI) chairperson made several tall claims about the UID scheme's potential to reduce subsidy leakages, in talks to media many times. Thus, he reportedly said that LPG subsidy leakages could be reduced by Rs12,000 crore using UID. He has never specified how this could be done. He hinted at authenticating the buyer/customer of the LPG cylinder. He did not mention when the authentication would be done. He headed a task-force on subsidies. The task-force submitted an interim report. A ministerial panel approved and accepted the report. The report recommends the use of UID for authenticating recipients of welfare subsidies. What else could one expect when the task-force is headed by the person who is spear-heading the UID project? This is like asking the accountant to check the veracity of the accounts he has prepared. More crudely, one could say, it is like asking the thief or the one who created a problem to suggest measures to prevent theft or prevent recurrence of the problem.

It reminds one, of Edgar Wallace's novel, "The Joker". In the novel, a rich man gifts a jail to the city where he lives. Later he is caught for fraud and jailed in the same jail he had gifted. He had made a tunnel from the jail to the outside, when he had it constructed. He escaped through the tunnel, playing a clever joke on the city. Enough escape hatches have been built into the UID scheme for those who are indulging in this colossal waste of public money to deny responsibility when it fails, as it is bound to.

A few of the task-force's recommendations on LPG

The biometric authentication 'tamasha' is the fulcrum on which rests the assumption that subsidies could be prevented using UID. Let's look at how ridiculous this assumption and the task-force's recommendations are in just one welfare subsidy scheme-LPG. Here are a few of the recommendations...

1.    Details pertaining to customers availing subsidised LPG would be published on the transparency portal of the oil company.
2.    Call centres would be established to address customer complaints.
3.    Distributors would be compensated for additional working capital they would need to stock non-subsidised LPG cylinders. (No one knows how much the compensation would be and how it would be paid. The task force does not deal with such trivialities.)
4.    "Aadhaar numbers of all members of households would be seeded against customer data". (Such phrases intended to confuse abound in the task-force report. Why use words, like, 'seeded'? It probably means that since each LPG connection has one name on it, the names and UID numbers and biometrics of all members of his/ her family would be captured and stored in the UID and perhaps, oil company database. Imagine the problem when a member of the family would have if he/ she moves out and lives separately.)
5.    The bank account numbers will also be collected and seeded! (Thus, if one wants to obtain a subsidised LPG connection, the bank accounts of all members of the family and their biometrics would have to be given to UIDAI.)
6.    "De-duplication on Aadhaar to eliminate ghost connections will be done. Application software will be developed; (What will be the cost of development of this software?) hardware will be fully compatible with UIDAI standards. (What will be the hardware cost? Who all will need both the software and hardware-the oil companies, government civil supplies departments, dealers, etc?)
7.    Subsidised LPG cylinders will be provided only to targeted/segmented customers. The process of identifying will be notified by government. (The Standing Committee on Petroleum and Natural Gas has recommended that subsidised LPG be given only to those with annual income less than Rs6 lakh per annum. I had written to the Parliament Standing Committee on Finance, which examined the National Identification Authority of India (NIA) Bill informing them that the frauds in welfare schemes are in decisions on eligibility and not caused by identity problems. The Parliament Committee accepted the same and wrote it into their report. So, how and who would identify those with less than Rs6 lakh annual income? Would your fingerprints reveal your annual income? What happens when one loses a job, receives a promotion, changes jobs, etc?)  

The task-force then says that pilot projects to test whether their method would work would be undertaken in two districts in Hyderabad and Mysore. Conflicting reports have appeared in the press on these pilots. Some said that oil companies have rejected the method. Another press report said that the ministries of finance and petroleum and oil company executives accepted the method. I sent RTI queries to oil companies. They replied stating that the pilot trials are incomplete. The ministry of finance denied any knowledge of it. Replies from other, including UIDAI have not been received. The RTI replies are placed in appendices to this monograph.
 
Ground realities

Let's see how the recommendations would work on ground. It is incredible that such a scheme would be launched with imaginary uses and halfway through its implementation, the promoters would be running pilot studies to test its feasibility. Is this how a responsible government and a former business magnate are expected to launch projects?

The logic of "authentication at delivery using UID numbers" proposed by the task-force is baffling. Are the intelligent people that staff the task-force not aware that it would be a simple matter to check diversions of domestic cylinders for commercial use? Cylinders of different colours are used for domestic and commercial purposes. The oil company delivers cylinders at the location of the customer. Does the task-force think that domestic customers then sell the cylinders to commercial enterprises? If, as the task force seem to say, large-scale diversions of subsidised LPG cylinders take place, are they suggesting that large number of people of this country are thieves? Do they not know that it is impossible to divert LPG cylinders without the connivance of the oil companies, their distributors and the civil supplies department officials?

Recently, it was reported that a chief minister of a state had surrendered three of the four LPG connections he had. How many politicians and bureaucrats have more than one connection? During the 2G scam, it was reported that a former Central Government minister for telecommunications had a BSNL telephone exchange installed for his personal use with over 300 lines. Whatever happened to that revelation? The purpose of the analogy is to show that it is not the people who are misusing facilities, but those in authority.

Why not use the customer number to detect diversion? Why another number, such as UID?

Reverting back to the LPG issue, every customer has a number given by the oil company for his/her connection. Oil companies and their agents have databases with the number of cylinders consumed every month by each customer. Everyone knows that an average family would consume a cylinder in about a month and a half. If a customer is found consuming say several cylinders a month, is it not possible to check on such customers to detect diversions or commercial use?

Recently, Karnataka government asked all LPG customers to provide their electric meter numbers to check if more than one connection exists in a household. This was an equally foolish exercise. A defence department layout had just one meter for 200 houses!
 
Instead of looking at where the diversion and mischief is taking place, the task force, driven by the UIDAI chief are barking up the wrong tree, trying to fix a small leak in the dyke, when part of the dyke wall has caved in.
 
Now look at the problems associated with authentication at delivery. The person in whose name the gas connection exists would have to be present at the time of delivery to authenticate him/her. To get round this stupidity, UIDAI has recommended linking the biometrics of all members of the family and their bank accounts with the LPG connection. Are they not able to visualize situations where no family member would be present, as when all of them would be working or at school/college and servant or neighbour collects the delivery?

To authenticate at delivery, every sales truck would have to carry a scanning device. Are these delivery staffs capable of handling such devices with the care they need? What would happen if, for whatever reason, lack of connectivity or malfunction of the device, the authentication fails? How many undelivered cylinders are oil companies and their distributors willing to accept? How many trips are they willing to accept for such failed deliveries? Imagine the hardship the family would have to go through in such situations. What is the cost of all this? Has the cost of scanners for every truck, the cost of spare scanners, their maintenance cost, the training cost for delivery personnel and so on been accounted for? Why are UIDAI and the government persisting with this foolishness in attempting to find uses for UID?
 
Authentication in other welfare schemes

The task-force has recommended that every retail fertiliser shop be equipped with scanners. They say that there 2.3 lakh retail fertiliser shops (Paragraph 7.2.1 page 40 Task-Force interim report). There are over 5 lakh ration shops, as on 30 Jun 2011. PIB news release. All these shops would have to be equipped and the shop owners and staff trained in handling scanning devices. Only a fool would think that this is feasible. Almost all countries in the world subsidize goods and service to their people. How many of them have indulged in such stupidity?

Take USA for example. How do they authenticate farmers who are given the subsidies? Our government and the UIDAI chairperson are ardent followers of the US economic system. In the US, $277.3 billion was distributed as subsidies to agri-businesses, between 1995 and 2011. Of this, the top 10% collected 75% of all subsidies, amounting to $172.2 billion. The rich farmer received $31,400 per year. The poor farmer at the bottom 80% got $594 per year. (Please see EWG Farm Subsidies website for details http://farm.ewg.org/region.php?fips=00000 ). This is what targeted cash transfers could do. Perhaps, this indeed is the purpose, to be able to send the subsidies to those whom the government in power wishes to favour.

Cash transfers and changing power equation

Once UID is in place, as far as welfare schemes are concerned, power will shift to the party in power at the Centre. Even though the parties in governments in the states may decide on who receives subsidies by identification of eligible persons, the control of distribution of the subsidies would be in the hands of the Central Government, since the authentication process is controlled by the UIDAI, which is a central authority. This would be especially true of centrally funded welfare schemes. For example, a village or electoral constituency that has not voted for the Central Government party could be discriminated against and subsidies denied on various pretexts.

A World Bank report points to the cash transfers in Columbia wherein the people tended to vote for the party in power perceiving them as the giver of the largesse.

Secondly, it is easier to swipe cash than goods. For example, for a customer to sell a LPG cylinder in black market or for an agent to divert a number of cylinders for commercial use is more difficult than to siphon off cash transferred to banks accounts.

LPG cash subsidy could be transferred to non-eligible people, if eligibility criteria are stipulated, or people with fake IDs. It is possible to fake fingerprints with a cost as little as Rs30. This was demonstrated to an E-governance secretary of a state government. Today, LPG subsidy is universal. Hence, there is no need to fake eligibility.

Thirdly, it would be much easier to divert the cash subsidy, even by eligible persons, since the subsidised cylinder need not be delivered at all, but instead, only authentication of the buyers done as if it has been delivered. To illustrate, assume that the LPG subsidy policy is that a household with income below Rs6 lakh per annum is eligible for six subsidised cylinders. Firstly, there is no way an oil company or government could verify the income of the household or the person in whose name the LPG connection is taken. Persons and households could fall into and come out of such income brackets. The 'eligible' household could merely be shown as having bought the cylinders, without taking delivery of the cylinders. The oil company's dealer merely obtains the scanned biometric to show the purchase. The cash is received by the household in the bank and cash given to the delivery boy/dealer in a mutually agreed sharing pattern. The cylinder is sent for commercial use where the subsidised cost is collected for payment to the oil company.

The moral of the story is that any system is only as good as the people who manage it. For example, there are laws against depositing and withdrawing cash and paying in cash beyond the stipulated sums (Rs50,000 for deposits and Rs20,000 for payments).

Akilesh Yadav, current UP CM deposited Rs44.67 lakhs in cash and paid the same amount through cash to a government department (Nazul department), as per media reports. Akilesh said that he received the sum as loan from his party. The I-T Appellate Tribunal ruled that there was no scope for introducing any black money for transfer of cash from one concern to another concern and that the genuineness of the transaction was beyond doubt. In a country where such rulings happen, how could UID hope to stop diversion of subsidies?

India's welfare schemes under foreign company control

Lastly, one should note that it is not the UIDAI that authenticates the person receiving the subsidy cash transfer, but a private foreign company and its official who manages the biometric database of all Indian residents. Thus, the social welfare system of the Nation would be run at the whims and fancies of private foreign companies.

Who would be legally responsible for fraud or failure to authenticate or false authentication? Would the UIDAI or the foreign company be responsible? While the matter is being decided, how would the person who did not receive the LPG cylinder cook his/her food? Is it possible for the foreign company to either create discontent or discredit a government deliberately make large-scale errors?

One could argue that it is unlikely that the foreign firms would not have any interest in who receives the subsidies. That could be true, though not necessarily so. They could have other motivations. The foreign company could be influenced or could on its own decide to sabotage the system. No nation would be idiotic enough to have its entire demographic database and welfare systems in the hands of private foreign companies, but the UIDAI seems to be doing exactly that. The UIDAI and the task-force on subsidies headed by its chairperson have been careful to hide this fact by showing the authentication in flow diagrams in its report as being done by UIDAI. At the same time the UIDAI has refused to disclose the contracts with these foreign companies.
 
Neither LPG nor any other subsidy leakage would be reduced though use of UID. All that would happen is untold misery for the subsidy recipient. It is high time the people of this nation realise the charade played on them and stop it.   

(Col (Retd.) Mathew Thomas is a former defence services officer and missile scientist turned civic activist, campaigning against state database control of the people.)

Is UID anti-people? –Part 2: A bundle of contradictions, misconceptions & mirages
Is UID anti-people? The database state –Part1