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Insights into Editorial: Fiddling while Rome is built

Insights into Editorial: Fiddling while Rome is built

05 March 2016

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Budget 2017 contained the announcement that use of the biometric identity card, Aadhar, will be provided statutory backing. Following this announcement, the government also introduced the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill as a money bill in the Lok Sabha.

  • Because it’s the single-most important method of decreasing massive political and bureaucratic corruption in India, the introduction of this bill is seen as one of the most transformative economic reform legislation introduced in India.


The concept of a unique identification scheme was first discussed in 2006 and administrative approval for the scheme “Unique ID for BPL Families” was given on March 3, 2006, by the department of IT.

  • In December, 2006, an EGoM was set up to coordinate work between the registrar general, engaged in the preparation of the National Population Register and issuance of multipurpose national identity cards to Indian citizens, and Aadhaar, which was to be issued to all residents.
  • In its meeting in November, 2008, the EGoM decided to notify UIDAI as an executive authority to be anchored in the Planning Commission for five years. The UIDAI was constituted on January 28, 2009.
  • Till date, over 98 crore Aadhaar numbers have been generated. The Aadhaar numbers have been seeded in 11.19 crore DBTL (direct benefit transfer of LPG) accounts out of total 16.5 crore beneficiaries.

Significance of this Bill:

  • Given the fears raised by various privacy advocates, the Aadhaar Bill has done well to categorically say “no core biometric information, collected or created under this Act shall be shared with anyone for any reason whatsoever or used for any purpose other than generation of Aadhaar numbers and authentication under this Act”.
  • The bill also aims at providing “good governance, efficient, transparent, and targeted delivery of subsidies, benefits and services”, the expenditure for which is incurred from the Consolidated Fund of India, to individuals residing in India through assigning of unique identity numbers to such individuals.
  • The proposed legislation will also address the uncertainty surrounding the project after the Supreme Court restricted the use of the Aadhaar number until a constitution bench delivers its verdict on a number of cases challenging the mandatory use of Aadhaar in government schemes and rules on the issue of privacy violation.


  • Once Aadhaar has legal backing a lot more subsidies can be targeted better, subject of course to the state governments identifying the beneficiaries and ensuring their bank accounts are Aadhaar-seeded—potential savings run into well over R1 lakh crore each year at just the central government level.
  • More than that, government departments can start sending digitally signed records of education/caste/property, etc, to the DigiLocker of each citizen.
  • Aadhaar-enabled financial transactions of the type being developed by the National Payments Corporation can reduce costs to a fraction and completely transform the payments system.
  • Also, mutual funds will be able to do eKYC to cut costs to a fraction—and hence dramatically increase their target market.
  • Besides, there are many more innovations that can ride on Aadhaar. In terms of what it can do to India’s productivity, this is perhaps the most significant pieces of legislation in a long time.


  • The clauses that allow information to be shared under certain circumstances are not clear and need a closer look as it appears they can be abused.
  • As in all such cases including phone tapping, the Bill says a court order will be required for sharing of information either in response to some police case or when national security demands it. This is where the potential problem comes in, more so since a district judge’s order is considered good enough.
  • If data is sought on, say, whether a person used his Aadhaar biometrics at a particular location—‘authentication records’, in jargon—that may still be permissible, though with very strict checks.
  • But a plain reading of Section 33(2) suggests that the information that can be revealed includes ‘identity information’ which, in the section on definitions, is said to include a person’s ‘Aadhaar number, his biometric information and his demographic information’.
  • This is clearly a drafting lapse as this allows biometric information of people to be accessed by anyone, including intelligence agencies.

Was the government right in introducing Aadhaar bill as a money bill?

Article 110 of the Constitution, defining the money bill, states that in addition to taxation matters, “the custody of the Consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund” is also part of a money bill.

  • The opening paragraph of the Aadhaar bill states that the purpose of the bill is to “provide for efficient, transparent, and targeted delivery of subsidies, benefits and services, the expenditure for which is incurred from the Consolidated Fund of India”.
  • Besides, if any question arises whether this bill can qualify as a money bill, the decision lies with the speaker of the Lok Sabha, and is final. Therefore, the argument that the Aadhaar bill cannot be a money bill is invalid and government is right in this regard.


While a law enabling Aadhaar which will pass judicial scrutiny will go some way in plugging leakage in the payment of subsidies, it is important to point out that even biometric determination of identity will not be a panacea. Leakages through impersonation and duplication of payment will be curtailed, but eligibility for subsidies is governed by determination of income. Electronic systems are no help there. The government should take note of these issues and try to address them holistically.