A revolution, brought about by the government!
Though governments are mostly reviled for the bad things they do, every once in while they do truly path-breaking work—the work done by the Atomic Energy Commission under Homi Bhabha, ISRO under Vikram Sarabhai, the Green Revolution under MS Swaminathan, Operation Flood under Verghese Kurien, NSE and NSDL under RH Patil and, more recently Aadhaar under Nandan Nilekani come to mind immediately. While Aadhaar, which is all set to hit the one-billion enrolment mark soon, is widely associated with transferring cash to citizens in place of subsidies—at least half of which get stolen along the way—the project is worth a lot more than the cash it will save, though that itself is considerable at well over a few lakh crore rupees each year. At the heart of the project was a philosophy to allow Indians to conduct their business in a paperless, cashless and presence-less fashion, and though a lot of that remains to be achieved, a solid beginning has already been made.
Since Aadhaar’s core—the de-duplication software that ensures there can be no two people in the database with the same biometrics—ensures a person’s identity is established beyond doubt, it is now possible to transact online without any fear of fraud, and that reduces costs, and therefore increases access dramatically. In the case of mutual funds, as Nilekani points out, the traditional requirement of a physical signature required a big network of agents for mutual funds and an acquisition cost of Rs 1,500 per client—this, in turn, meant an investor required a portfolio of Rs 3 lakh for the fund to break even and therefore just 3-4 million households could be targeted. If the cost came down to Rs 100, the break-even portfolio value would be Rs 20,000 and the number of target households would rise to 34 million; at Rs 10, which is the cost with an Aadhaar-based eKYC done online instead of the physical signature, the break-even is just Rs 2,000 which means 105 million households are potential buyers.
Digilocker, another Aadhaar-based app, has the potential to take the revolution much further since each government department can give citizens digitally signed documents—few departments are doing this right now, but the infrastructure has been put in place. Which means, eventually, individuals don’t have to keep any papers with them—a potential employer can be mailed a link to your school-leaving certificate in your Digilocker. Another Aadhaar-based app—there are 24 from private sector companies under the Aadhaar-bridge already—Novopay allows villagers to open bank accounts in kirana shops and, with 38,000 outlets already, will do Rs 800 crore of transactions this year itself. Around 62 crore transactions amounting to over Rs 20,000 crore have taken place since the launch of direct benefits transfer (DBT) by various government departments; over 2.3 crore people withdraw their MGNREGA wages/pension every month by using Aadhaar finger print authentication services—thanks to Aadhaar, Indians can now be fully mobile and have their benefits follow them wherever they go, something unthinkable even a few years ago. With the National Payments Corporation of India working on Aadhaar-linked money transfers, the necessity of having bank accounts also disappears. In the same way that Uber became a success riding upon the mobile, the internet and GPS—that is, on infrastructure already created—the Aadhaar infrastructure is ready for developers, both in the government and the private sector, to come up with new solutions. Which, of course, is why prime minister Narendra Modi agreed to support Aadhaar when he came to power though the BJP was against the project till before the elections.