How the courts order has complicated the UPAs cash transfer plans.
The Supreme Court interim ruling against the UPAs biometrics-based identity scheme, Aadhaar, touched on two aspects of the project: enforcement and eligibility. It has ruled that enrolment for the Aadhaar card should be voluntary; it cannot be made mandatory to claim public services and subsidies. With regard to eligibility, it has declared that the card cannot be issued to illegal migrants; it can only be issued after verifying citizenship.
Since Aadhaar is considered critical to targeting public services and subsidies, to ensure comprehensive coverage of the poor at minimum cost by reducing corruption and improving transparency, the courts order will have major implications for these objectives. To examine the possible implications, we need to know how Aadhaar was conceived and how it works.
It is a multipurpose national identity card project, a 12-digit unique identification number issued by the Unique Identification Authority of India (UIDAI) on behalf of the government of India. Enrolment is not mandatory. The number is linked to demographic and biometric information photograph, 10 fingerprints and iris recognition about each individual. This serves as evidence of identity and address for an Indian resident. Such information would establish individual identity and eliminate duplication.
Such foolproof identification is imperative today because there is an urgent need to contain the fiscal deficit by reducing excessive public expenditure due to leakages and inefficiencies in the implementation of safety nets. For instance, according to Census 2011, there are 21 million households in Andhra Pradesh, but the number of ration cards in circulation is 24.5 million. This is due to duplicates (where the same individual benefits multiple times) and ghosts (non-existent beneficiaries).
To address these issues, the government has created what is called the Direct Benefit Transfer System (DBTS). The DBTS aims to credit funds for scholarships, pensions and wages under public works directly to the bank accounts of the beneficiaries identified, using their Aadhaar numbers. This would eliminate duplicates and ghosts and therefore minimise leakages or undue public expenditure.
Thus, the very design of the DBTS is such that the benefits of various welfare programmes would be conditional on Aadhaar enrolment. This is what has motivated the public to pursue enrolment despite the inconvenience. The UIDAI has already issued more than 400 million cards.
The government launched the DBTS on January 1 this year. To begin with, it covered seven welfare schemes in 20 districts,