Thomas White Global Investing
India Stamp
May 4, 2012
A Postcard from the Asia Pacific
India: Creating a billion identities

Aadhaar: India’s Identity

India’s Unique Identification number project (UID) will seek to create a database of each Indian resident in order to deliver government subsidies and other services efficiently. Under the massive program, hundreds of small make-shift offices replete with laptops, finger-print and iris scanners will be set up to record a biometric profile of the country’s residents.

Whenever there is an election in India, bureaucrats armed with ballot machines and protected by gun-carrying guardsmen travel on elephants through thick forests and mountains to set up polling stations. A fascinating sight, they ride on camel backs to cross deserts and camp on boats in the backwaters for the convenience of voters. Elections are sacrosanct in this nation of 1.2 billion people. No wonder then that India is the world’s largest democracy.

But India has long struggled to transform its success in conducting elections into good governance. For one, the country has fumbled in administering its vast and myriad social programs meant for the country’s poor people. Typically corrupt officials and local strongmen often pocket a huge chunk of the welfare money apportioned for the needy. Crooked government servants even create imaginary workers to get their hands on state subsidies and funds. This has long left India’s citizens frustrated and its government embarrassed.

But the sorry state of bureaucratic India now looks likely to change, thanks to a vast nationwide program that will give a unique identification number (UID) to each Indian resident. Labeled Aadhaar, which literally translates to ‘foundation’ or ’support’, the project will aim to recognize and legitimize millions of poor and rural Indians who otherwise would have no documentation. This could revolutionize the way India delivers its subsidy and social security programs.

Although the UID project traces its origin to the mid-2000s, the initiative has taken on added steam since 2010 when Nandan Nilekani, a former chief executive of India’s technology outsourcing giant Infosys, became the head of the project. Nilekani inspired hordes of Indian-origin technocrats to temporarily leave Silicon Valley and join his effort to inspect the bovine landscape of rural India.

The project was massive. India had to establish one of the world’s largest databases, consisting of more than a billion people. What’s more, the UID project not only had to create the database at a minimal cost, but also had to ensure that the database was foolproof and secure.

Given Indian government’s poor record of project execution, many expected the initiative to come a grinding halt. After all, setting up the infrastructure and personnel to record a billion identities was no lean task. But the project has been a shining example of what India is capable of when the country embraces the right approach to its problems. Within the first year, the UID project enrolled 200 million people, and Nilekani is confident that it will register a total of 400 million in 2012. Efficiency and security have been the watchwords for the project right from the start. Unlike other government undertakings, UID made the best of its resources, ushering in a huge amount of innovation and talent. It created tremendous competition among India’s home-grown IT champions like Wipro and HCL, attracting contracts for the UID work. Not only did employees belonging to these firms work more efficiently than their bureaucratic counterparts, they brought down the cost of registering and giving a UID to a resident to just $2 dollars. That’s a price tag many other developing nations could afford.

Despite UID’s success thus far, many social activists are concerned about the things that could go wrong if information about India’s residents fall into the wrong hands. They also worry that India’s current privacy and data protection laws are not clear about what type of data on Indian residents UID can collect and store.

Nonetheless, the benefits of the UID could be many. If successful, the program will enable millions of rural Indians to open a bank account for the first time in their lives. It will then help the government transfer cash subsidies directly to beneficiaries rather than depend on a tarnished route through corrupt officials. ‘Ghost workers’ or imaginary people created by greedy officials could vanish.

These days, young employees carry laptops and iris scanning equipment to remote corners of India just as bureaucrats carry ballot machines during election time. The queues are similar – old men with thick glasses, farm laborers, and frail women. All of them have gathered to get their UID number and take their place in a modern India. And yet again, the wheels of India’s participatory democracy keep turning.

Image Credit: Juliannevillecorrea’s Photostream on Flickr under a Creative Commons License

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