Aadhaar proves its usefulness again as Karnataka successfully transfers subsidies to one million farmers

The disbursal of benefits to the farmers was realised through the Aadhaar Payment Bridge (APB), which is popularly known as DBT.


Aadhaar proved its usefulness again at cutting costs, plugging leakages, and decreasing corruption with a smooth transfer of Rs 671 crore of input subsidies to farmers in Karnataka. The direct benefit transfer (DBT) program was launched by Karnataka Chief Minister Siddaramaiah at Vidhan Saudha in Bengaluru. The subsidy was realised from the National Disaster Relief Fund (NDRF) according to a report in the Economic Times.

karnataka Chief Minister Siddaramaiah

Karnataka Chief Minister Siddaramaiah

The disbursal of benefits to the farmers was realised through the Aadhaar Payment Bridge (APB), which is popularly known as DBT. A total of Rs 44,967 crore has been distributed through the APB over the course of two years, which has seen a ten fold increase since May 2014, where the total value transferred through APB stood at around Rs 40 crore. APB allows the disbursal of benefits at scale, as demonstrated in Karnataka. The number and value of transactions seems poised to grow exponentially. The Government has said that deployment of Aadhaar earned Rs 36,144 crore in savings for the government, over the course of two years.

An operator arranges the Unique Identification (UID) documents submitted by people for their enrolment in the desert Indian state of Rajasthan. Image: Reuters/Mansi Thapliyal

An operator arranges the Unique Identification (UID) documents submitted by people for their enrollment in the desert Indian state of Rajasthan. Image: Reuters/Mansi Thapliyal

In a population of over 125 crore, 111 crore Aadhaar numbers exist. About 10 crore of these numbers are linked to bank accounts. A UN report on the World's Social Situation, 2016, recognises Aadhaar as having a "tremendous potential to foster inclusion by giving all people, including the poorest and most marginalised, an official identity." Aadhaar has proven time and again that it is effective at reducing hassles by providing a presenceless, paperless and cashless environment.

A villager gets his fingerprints scanned for Aadhaar enrollment.

A villager gets his fingerprints scanned for Aadhaar enrollment.

Other benefits ensured by Aadhaar

Aadhaar has found its way into the daily lives of people. Aadhaar is a prerequisite for the Joint Entrance Examination (Main). Pensioners can avoid filing documents yearly, and in person by availing the Jeevan Pramaan facility that is available with an Aadhaar identification. The required documents are submitted automatically and electronically. The eKYC facility allows users to sign up for new services quickly and easily. Mukesh Ambani, for example, has said that Aadhar helped Reliance Jio cross 100 million customers. The income tax department now issues PAN cards using the Aadhaar number. To prevent mass booking and nefarious activities by travel agents, the Indian Railways is in the process of making Aadhaar mandatory for electronic ticketing.

Mukesh Ambani, for example. has said that Aadhar helped Reliance Jio cross 100 million customers.

Mukesh Ambani, for example. has said that Aadhar helped Reliance Jio cross 100 million customers.

Aaadhaar plays a critical role now in many of the Government and State programs, and is most commonly used in Rajasthan, Kerala, Himachal Pradesh, Haryana and Chandigarh. Welfare schemes, scholarships, subsidies to farmers, food subsidies, cultural activities, social outreach programs, LPG subsidies and financial support for women and children all have benefited from the rollout of Aadhaar and related platforms. The mid day meal program is tracked and disbursed through Aadhaar numbers. However, the government has made sure that those who do not have Aadhaar numbers, still continue to enjoy the benefits through other means of identification.

Bhim supports a number of payment options. Image: Bhim

Bhim supports a number of payment options. Image: Bhim

Aadhaar-based Payment mechanisms

There are a number of payment mechanisms associated with Aadhaar. Aadhaar Enabled Payment System allows for instant transfer of funds directly to the bank accounts of people, through an Aadhaar number. The payment system has been implemented in apps such as Bhim. Aadhaar Pay for merchants allows shoppers in remote and rural areas to authenticate transactions without the use of smartphones or plastic cards. Only the shopkeeper needs a fingerprint scanner and an application provided by his or her banker. The APB or Aadhaar Payment Bridge allows for the disbursal of benefits rapidly with assurance that the money actually reaches the intended beneficiaries.

Image: IDFC

Image: IDFC

Concerns with Aadhaar

While Aadhaar has clear ambitions to be a one stop shop for authenticating identifications, disbursal of benefits, and making payments, there are still concerns that remain. No developed economy has rolled out a biometric based authentication system at such a scale, but a less ambitious version of the Aadhaar program has been implemented in Brazil and Mexico. Recently, there were reports of a data breach in the Aadhaar system where multiple transactions were executed with a single fingerprint.

Payment Authentication through biometric scanning. Image: Narendra Bhooshan Twitter: @nbhooshan

Payment Authentication through biometric scanning. Image: Narendra Bhooshan
Twitter: @nbhooshan

While the government has assured the people that the Aadhaar system is secured adequately, once biometric security is compromised, it stays compromised for life. While the source data by the government may be secured with the latest technologies, giving out your fingerprint to a shopkeeper is as good as handing over your banking password. Policy advocates and experts have suggested the use of smart cards, that can be replaced in case they are compromised. People cannot grow new eyes or fingers, once their biometric security is compromised.


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