A Perspective on Aadhaar

April 13, 2018

India’s digital transformation

Rapid developments in and adoption of digital technologies have left no doubt that they will be an integral part of our lives in the 21st century and beyond. In India, there are more than 500 million first-time internet users expected to come online through their mobile phones over the next five years—a segment of the population we call the “Next Half Billion”. Historically, this population segment has been underserved and unable to engage in the digital economy. We believe digitisation and connectivity can open doors to new opportunities for the next half billion by improving access to government services, as well as making it easier for businesses and entrepreneurs to reach and serve them.

While emerging technologies can be empowering, they can also be a source of exclusion. For new technologies to be empowering, they must be designed to be people-centric and implemented with protections against risks. It is critical to build the guardrails to minimise harm to individuals and communities, and overcome the barriers that the most vulnerable populations face while engaging in this new technology-focused world.

The evolution of legal identity

Over the last several decades, the world has seen a shift from traditional community-based identification to the formalization of individual identification by the state. In an increasingly digital world, the ability to establish one’s identity is ever more critical. Legal identity has received increasing global attention, both as an individual right and as an international development objective, as outlined under the UN Sustainable Development Goal 16.9, which calls for legal identity for all by 2030. Many countries are choosing to implement identification systems, and most of them prefer to use digital technologies that enable unique identification and real-time authentication.

Digital identity, if done right, has the potential to move the needle on this development agenda by empowering billions of people to engage with the modern world.

The role of Aadhaar

In India, an increasingly connected next half billion population and the broader global movement toward legal identity are two forces that intersect at Aadhaar. Meaning “foundation” in Sanskrit, Aadhaar is a 12-digit identification number issued by the government of India. Today, it is the world’s largest biometric digital identity system, with more than 1.2 billion people enrolled.  

Like many other countries introducing digital identity systems, Aadhaar faces a wide array of technological and policy considerations—and critical debates on inclusion and privacy—that are shaping its development and implementation. As the system continues to evolve and improve, we believe that Aadhaar has great potential to be the critical public infrastructure that can serve all Indians. Our perspective is that:

  • Aadhaar is a foundational platform that can enable India’s digital evolution in the 21st century. Aadhaar is being widely used by the government and the private sector as a way to identify individuals when providing services. Aadhaar e-KYC has been used by banks and telephone companies to rapidly onboard customers, reducing transactions costs and speeding up electronic verification. Individuals benefit from the speed of authentication and reduced need for paper documentation. 
  • Aadhaar can be used to eliminate “ghosts” by de-duplicating beneficiary lists and authenticating transactions in real time. These objectives are in line with the recent Right to Privacy judgment asserting that “there is a vital state interest in ensuring that scarce public resources are not dissipated”. The government of India also claims significant financial savings from the use of Aadhaar in subsidy delivery (although these numbers are contested).  
  • Aadhaar can be a tool for large-scale innovation. Combined with elements of the India Stack, such as the unified payments interface, digi-locker and e-sign, it has the potential to expand economic and social opportunities to previously excluded populations. Government and the private sector can leverage these tools to build an inclusive ecosystem that benefits all.

While the case for the benefits is evolving, Aadhaar is not without its challenges. In order to reach its potential as an effective digital identity system, we believe Aadhaar—as with all digital identity systems anywhere in the world—must be: (1) available and useful for all individuals; (2) nondiscriminatory and designed for meaningful user control and privacy; and (3) designed to provide for recourse and accountability. Therefore, we believe that:

  • Aadhaar should not be compulsory or allowed to become a single “point of failure”, especially for essential services such as food and pensions. It is unacceptable to make Aadhaar mandatory without offering alternative ways of establishing one’s identity. While enrolling in Aadhaar was initially deemed voluntary, it is effectively mandatory in practice: An Aadhaar number is now a de facto requirement for access to many public services, from filing taxes to accessing government subsidies. The government has recently clarified that Aadhaar should not be made mandatory to access welfare benefits. But this message has not percolated down adequately, which continues to cause difficulties for people.
  • The challenges of exclusion must be addressed. Evidence suggests that individuals are being excluded from the very benefits which they are entitled to and depend on for subsistence. The efficiency argument, or the savings argument, will not be credible if there is exclusion.
  • Introduction of any new system can result in exclusion, especially if it is technology dependent. In the case of Aadhaar, exclusion can happen because of Aadhaar-specific issues, such as poor quality of fingerprints, or broader issues like electricity and internet outages. The 2016-2017 State of Aadhaar Report, funded by Omidyar Network, found significant authentication failure rates and called for more research to better understand the points of failure.
  • There has been real concern that Aadhaar can be used as a tool for surveillance. The tokenization and virtual ID measures adopted by the government are useful steps, but more needs to be done to drive the adoption of these ideas. 
  • The Aadhaar Act of 2016 does not offer individuals an effective process to seek redress for alleged violations of the Act. Only the Unique Identification Authority of India (UIDAI) or authorized officers can file a criminal complaint for violations under the Act (such as disclosure or unauthorized use of the identity information). Therefore, individuals have to depend on the UIDAI’s judgment to act against bad actors.
  • Realising the potential benefits of Aadhaar depend on state capacity. Hasty and inappropriate implementation can lead to privacy, security, and exclusion risks. While many of these risks may stem from broader governance challenges, there are some that can be aggravated by Aadhaar, and new ones that the system can create. 
  • The Identities Project funded by Omidyar Network—an ethnographic research lens on identification in India—found that enrolling in identity systems can surface challenges of privacy, inclusion, and empowerment for vulnerable populations, including migrants, women, and persons with disabilities, among others. Creation of new means of identification can shift and create new vulnerabilities for individuals. This calls for a deeper understanding of the human-technology interface, especially for the most vulnerable populations, when such new systems are introduced.

A way forward

The Supreme Court of India’s decision on privacy set the stage for a holistic privacy and data protection regime for India. While much broader than just Aadhaar, the August 2017 judgment will have significant implications for how the program evolves in the future. Moreover, the proposed introduction of a Data Protection Authority, if carefully designed and adequately resourced, can improve the institutional governance of privacy. Likewise, the UIDAI’s recent enhancements to the core design of Aadhaar, including the introduction of “Virtual ID”, tokenization, and registered devices, are positive developments. However, there is a clear case for explicit public discussion on the other suggestions that have been made, such as PIN-based smart cards.

Last year, we joined a broad coalition of global institutions led by the World Bank to endorse the Principles for Identification for Sustainable Development. As India debates the future of Aadhaar technology and policy, these principles can serve as a useful reference point.

Framing the debate on Aadhaar into a binary “good-bad” is counterproductive. India has built an unprecedented, critical public infrastructure, and leaders across sectors must do everything we can to ensure that it works for all people. The digital identity that India adopts must reflect the needs and aspirations of its residents. Therefore, Omidyar Network will continue to fund research that generates evidence on the costs, use cases, benefits, and risks of Aadhaar. We hope that such research will be helpful to government, civil servants, academics, civil society, businesses, and individuals. We will also continue to be constructive participants in the discussions on a governance and rights framework that protects privacy and minimises risks to individuals. This, we believe, will help us get closer to an effective digital identity system that can truly empower India’s residents.

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