Rethinking Aadhar PDF Print E-mail
Tuesday, 25 March 2014 00:00
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FM suggests a big overhaul required

Between the government putting the Aadhaar-based direct benefits transfer (DBT) on hold for LPG cylinders and the Supreme Court ruling that Aadhaar numbers couldn’t be made mandatory for availing government services, Nandan Nilekani’s pet project was pretty much derailed anyway. As a result, enrolments fell from 35.8 million in January to 17 million in February and so far in March, just 12.5 million people have registered for an Aadhaar number.

Finance minister P Chidambaram’s statement, in an exit interview to this newspaper, that Aadhaar needs to be re-thought completely is probably the last nail in its coffin. This newspaper has been arguing that if the government couldn’t get DBT right on LPG, it couldn’t get it to work anywhere. In various schemes like MGNREGA or providing subsidised food in ration shops, the success of DBT depends upon the local administration providing the names of the beneficiaries and ensuring they have Aadhaar-linked bank accounts. In the case of LPG, however, there are only 3 firms involved, all are PSUs, and all have databases that are IT-ready—so linking the LPG connection with a bank account and an Aadhaar number should have been pretty simple. Turns out, based on what the FM has said, even this didn’t really work and many complained that the bank account—to which the subsidy was to be transferred—was not conveniently located.

Apart from the mockery this makes of the government’s claims of the spread of no-frills accounts, it means the next government needs to quickly figure out how to get Aadhaar back on track—leakages of 50-55% in most government programmes is something that the nation cannot afford, more so now that a mammoth Food Security Act has been added to the list of subsidies. This means examining whether India Post is up to the job and can be used for the cash transfers—certainly it has the branch network to ensure it is close enough for all beneficiaries. The possibilities of using the network of mobile phone companies—again, these are outlets that are geographically very close to the customers—also needs to be examined carefully. Till now, the problem with using mobile phone companies was that they were not under the purview of RBI, and so could not be entrusted with distributing government funds. If, however, under what Nachiket Mor has proposed, the mobile phone firms are able to convert to ‘payment banks’ under the purview of RBI, this issue will be taken care of. While it is unfortunate that Nilekani may not be available to re-imagine Aadhaar—were a non-Congress government to come to power—the job has to be done nonetheless.


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