Aadhaargate: Why India Inc. Is Fretting Over Recent Changes to the Country’s National ID System

Aadhaar: A totalizing framework for national identity

  • Identify beneficiaries of India’s welfare schemes so that benefits are disbursed to those who actually need them. This was one of its primary motivations — with corruption rampant across India’s public services, welfare benefits for the poor were being usurped as a result of bureaucratic malfeasance.
  • Create a universal identity scheme; prior to the introduction of Aadhaar, there was a wide array of government-issued documents that were used to establish one’s identity. Opening a bank account, for instance, required a combination of IDs: Passport, driver’s license, a PAN card (tax card), ration cards etc. Often, banks required customers to produce copies of such documents attested by the appropriate authorities, to fulfill Know Your Customer (KYC) requirements. In this context, Aadhaar was envisioned to streamline the compliance and customer onboarding process.
  • Create a verifiable identity for India’s poor. With India still being primarily an agrarian economy, a large section of its population still resides in remote and rural regions. High levels of illiteracy, combined with poor access to government services, meant that this section of the population did not have an official identity. The Aadhaar was intended to give this large subset of Indians an identity for the very first time, along with creating a mega data source of identity information which could then be used to verify identities.

How the ground realities of Aadhaar triggered judicial action

  • Private companies, such as banks, telecoms, fintech solutions, required customers to sign up for their services using Aadhaar card. This was not optional — it was a requirement. For private companies, Aadhaar was highly effective in streamlining the boarding process; it allowed them to digitally onboard customers, and it dramatically reduced the operational cost of verifying the identity of customers. According to Drèze, however, there was always the persistent threat of private players monetizing their customers by selling their Aadhaar information for targeted advertising, consumer marketing and, the creation of a credit rating infrastructure.
  • The second objection was based on fears of state surveillance. Drèze argued that the Aadhaar allowed the government to build a 360 degrees profile of an Aadhaar cardholder. According to Drèze, the Indian government could build a comprehensive profile on a citizen by using their Aadhaar details to link their information from disparate databases. The government, Drèze argued, could not only glean information on who a citizen talks to, where she travels, what she buys, but also her browsing history.

eKYC or Manual identity verification? Future of uncertainty looms before India Inc.

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