The Aadhar Debate – Unique vs Best

Aadhar is basically meant for ensuring the targeted delivery of financial and other subsidies benefits and services to the eligible citizens of the country by the government. Hence the supreme court has rightly up held the constitutional validity of Aadhar as it is a fool proof method of identifying the beneficiaries. This, in turn would eliminate the binami/ bogus beneficiaries who eat into the government’s exchequer in the delivery of financial and other subsidies benefits and services. Since the delivery of financial and other subsidies benefits and services by the government is a continuous activity, linkage with Aadhar will yield substantial benefits in the form of cost savings to the government.

In November, 2012 National Institute of Public Finance and Policy had submitted a report of Cost- benefit analysis of Aadhar to the government of Bharat. This analysis takes into account the costs of developing and maintaining Aadhaar, and of integrating Aadhaar with the schemes over the next ten years. Even after taking all costs into account, and making modest assumptions about leakages, of about 7-12 percent of the value of the transfer/subsidy, NIPFP estimates that the Aadhaar project would yield an internal rate of return in real terms of 52.85 percent to the government.

IRR of 52.85 percent is phenomenal by any standards and this estimate of NIPFP is done on a conservative basis taking into account only the following schemes, viz., MNRGES, PDS, Fertiliser and LPG Subsidies, IAY (Indira Awaas Yojana), ASHA (Accredited Social Health Activists), ICDS (Integrated Child Development Centres), scholarships and pensions. These cost benefit estimates were prepared covering the period 2010-11 to 2020-21.

Since the subsequent maintenance cost on UIDAI will mostly be only towards running expenses the actual benefit that accrues beyond 2020-21 will be on a much larger scale. NIPFP estimates indicate an overall benefit of Rs.72,620 Crores up to the period 2020-21. However, the union finance minister had claimed on 26th September, 2018 that Aadhar has helped the government in saving Rs. 90,000 crore every year with targeted delivery of government schemes.


The citizens’ charter for Unique identification Authority of India (November, 2018) states UIDAI was created with the objective to issue Unique Identification numbers (UID), named as “Aadhaar”, to all residents of Bharat that is

(a) robust enough to eliminate duplicate and fake identities, and

(b) can be verified and authenticated in an easy, cost-effective way.

It was also envisaged that banks and other financial institutions interface with Aadhaar Payment Bridge (APB) and Aadhaar Enabled Payment System (AEPS) linking Aadhaar to bank account would enable the government to accomplish the goal of “Targeted Delivery” and “Financial Inclusion”.

The SC said Aadhaar cannot be made mandatory for openings of a bank account and for obtaining mobile connections and school admission. SC also directed the government to ensure that illegal migrants are not issued Aadhaar to get benefits of social welfare schemes. 

As per the SC verdict private entities cannot ask for Aadhar and the government cannot allow sharing of data on the ground of national security. However, SC has made linking of Aadhar and PAN mandatory and for filing of Income Tax Return. Thus, the Supreme Court has struck a balance between linkage of Aadhar for government welfare schemes to weed out the bogus beneficiaries and on the other hand ensuring the right of privacy of the citizens.  

However, it is surprising to note linking of Aadhar with voter’s ID card is not made mandatory in the SC’s verdict nor the petitioners have asked for the same.  The SC in its verdict has asked the Centre to bring a robust law for data protection as soon as possible. 

While it is imperative for the government to limit the scope of Aadhar as per the SCs verdict, the government can use Aadhar as an instrument to create a unique database with regard to its schemes and subsidies covering the sectors- Health, Education and PDS and also leverage on the same for data mining and predictive analytics to estimate the emerging issues in these sectors and take suitable remedial policy actions accordingly.

The SC verdict only prevents the government from sharing the individual citizen’s data on the ground of national security. Nevertheless, the government can use this aggregate data base for estimating the emerging issues in the sectors-Health, education and PDS in order to take the required policy measures to address those issues. Bharat, like most of the emerging economies in Asia and Africa, suffers from the vicious cycle of poverty-ill health and illiteracy that are interrelated and interdependent. Therefore, creating a unique data base on the government’s schemes and subsidies covering these three sectors targeting the eligible citizens, particularly BPL (Below the Poverty Line) would yield immense benefit to the country in the long run and the country can aim to improve its global rankings in HDI (which primarily consists of standard of living, health and education) significantly which currently stands at 130 (out of 189 countries).

The objective behind Aadhar to create a Unique Identification numbers (UID),”, to all residents of Bharat that is robust enough to eliminate duplicate and fake identities can be achieved only when it is linked with the Census.

This, in turn requires alignment of all birth and death records of the citizens in the country with Aadhar, which is a long way to go. For this to become a reality the government has to bring a robust law for data protection, ensure the right to privacy of the citizens and at the same time encourage the citizens to voluntarily obtain Aadhar cards for the common good.

It is better to be unique than the best. Because, being the best makes you the number one, but being unique makes you the only one.“ said CJI Dipak Misra, Justice A K Sikri and Justice AM Khanwilkar in their judgement on Aadhar.

Let us hope Bharat will set an example to the rest of the world by creating a comprehensive regulatory framework that not only protects the right to privacy of the people and safeguard their data but gives every citizen of the country the opportunity to have a unique identity and march towards total financial inclusion and digital economy using Aadhar as an instrument to do all transactions, both financial as well as non financial.

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About the Author

Dr. B.N.V. Parthasarathi
Ex- Senior Banker, Financial and Management Consultant and Visiting faculty at premier B Schools and Universities. Areas of Specialization & Teaching interests - Banking, Finance, Entrepreneurship, Economics, Global Business & Behavioural Sciences. Qualification- M.Com., M.B.A., A.I.I.B.F., PhD. Experience- 25 years of banking and 14 years of teaching, research and consulting. 100 plus national and international publications on various topics like- banking, global trade, economy, public finance, public policy and spirituality. One book in English “In Search of Eternal Truth”, two books in Telugu and 20 short stories and 27 articles published in Telugu. Email id: [email protected]