According to the UIDAI chief,  the UID number will create a much more ‘open’ marketplace, where ‘hundreds of millions of people’ who were shut out of services will now be able to access them

The truth is finally out. In case you were wondering why the government and big corporates are lobbying hard for the unique identification (UID) programme, here is the answer.

Speaking at the Nielsen Company's 'Consumer 360' event in New Delhi, Nandan Nilekani, chairman, UID Authority of India (UIDAI), said that over a third of India's 1.1 billion 'consumers' had been largely overlooked in areas such as banking and social services.

"The (unique identification) number will create a much more open marketplace, where hundreds of millions of people who were shut out of services will now be able to access them," he told business leaders, adding that the poor find it difficult to reach the market. "Their anonymity limits agencies from providing them services that are remotely available, and that could be accessed through a mobile phone," he said.

Delivering his keynote address, Mr Nilekani focussed more on Indian consumers, especially the ones in remote places, rather than his pet project, the UID or Aadhaar. However, Piyush Mathur, president, Nielsen for India, was more forthcoming. He said, "The UID system will change the way we market to consumers. It will also change the way companies deliver goods and services. At a basic level, UID will enable businesses to improve their traditional supply chains in support of consumers across the country but the big win comes with being able to identify emerging demand."

As per our knowledge and understanding, the UID as a system is being pushed in order to provide identification to the 'poor' or the residents who keep migrating. Everyone, including Mr Nilekani and even the prime minister believed that the UID would help improve the public distribution system (PDS). With the UID, the poor would be able to receive food grains, which otherwise would have vanished in the transit between government's warehouse to the PDS shop. (See: http://www.moneylife.in/article/78/8567.html).

Interestingly, the fast moving consumer goods (FMCG) and auto sectors, riding on the robust demand from rural markets, did not need UID for reaching their customers. When the rural market called, these companies responded with innovative products that were more suitable to consumers. It may be the use of sachets to sell shampoo, hair oil etc at affordable prices or more fuel-efficient and sturdy vehicles or variants at lower rates, those who have adapted to this strategy are enjoying the fruits.

Mr Mathur said, "Demand has driven new products like shampoo sachets and low-price vehicles but with more information around consumption habits, those types of products can be identified earlier and brought to market in lockstep with consumer needs. That means manufacturers and retailers will waste less money on unnecessary product development, hone their distribution capabilities and anticipate consumer needs."

According to the UIDAI chairman, four broad trends like a demographic disruption, mass migration to cities, availability of low-cost mobile phones and impatience with failing systems, are heralding the rise of a new kind of consumer in India. "This shift in attitudes is creating new urgencies for our services and infrastructure. And we are indeed seeing the emergence of solutions that respond to these forces," he said.

Using UID or Aadhaar or allowing its database to be used by companies for marketing would turn the UIDAI into a business against its mandate, feels some activists. According to an IT expert it appears that pressure on the corporates to show revenues is driving them to squeeze the last drop of blood from the most vulnerable sections of society, namely the poor.

"With foreign companies joining the fray using this as a means to show growth which is difficult to achieve now in the developed world, and the third world opening their door to them by using a fig leaf in the name of helping the poor, the UID is turning whole of India into a 'dukaan'," he said.