Identity Crisis

India lays technological foundation for economic transformation

By Tarun Wadhwa

Aadhaar program

An Indian man prepares for an ID photograph in order to enroll in the Aadhaar program in Old Bhopal, Madhya Pradesh, India, on July 29, 2011.

Harish Tyagi

In what might be one of the grandest technology experiments ever attempted, the Indian government has set out to collect demographic information, fingerprints, and iris scans from all of the country’s 1.2 billion residents. With this information, they will issue each person a 12-digit Aadhaar (meaning foundation) number, allowing Indians—for the first time—to prove their identity in a matter of seconds. If successful, India will build the technological infrastructure for a modern economy, while fundamentally transforming the way residents interact with their government. Yet there are enormous logistical difficulties, as well as serious privacy and security risks.

Identifying the issue

Currently, each governmental department works in isolation, maintaining its own separate records. Over time, though, systematic corruption and mismanagement have filled these databases with fraudulent information. Hundreds of millions rely on the help of the state, but there are still many places where most of the goods allocated for the poorest families are stolen before they even reach them.

There is a major issue at the root of these problems: large portions of the population lack even the most basic verifiable identity documents. There are countless millions living on the margins of society who have yet to receive any official recognition from their government. As a result, access to financial services remains extremely limited for most of the country, especially in rural areas. For the poorest and most isolated groups, this lack of access is devastating; they are unable to receive benefits, make investments, or accumulate savings.

Connections and commerce

However, there are innovative new banking technologies that can reach these groups, presenting an amazing opportunity to reshape the nation and lift hundreds of millions out of poverty. Developers aim to create sophisticated Aadhaar-linked bank accounts that allow for a system of digital payment where two villagers could send each other money with little more than their identity numbers and an internet connection. Here, the mobile phone market could offer a gateway for India’s masses into the financial system.

Unique identity numbers serve as the key with which multiple personal records can be brought together, facilitating things such as background checks, health insurance, and massive identity silos used by advertisers. It also can enable government agencies to target their benefits. Instead of the current inefficient cash distribution system, agencies will be able to transfer money electronically directly into a resident’s account. With its rigorous digital audit trails, supporters of the program believe that its implementation can lead to billions of dollars in savings for taxpayers and greater accountability in public distribution.

Unprecedented undertakings

For India, Aadhaar represents an opportunity to showcase its nascent technology prowess. The prime minister selected respected information technology executive Nandan Nilekani, the former CEO of IT outsourcing giant Infosys, to head the authority responsible for designing and implementing the new system. An unelected official, Nilekani has received the rank and status of a cabinet minister.

Developers are looking to leverage India’s biggest public and private institutions in a partnership model, where dozens of different agencies will assist in the enrollment process. Post offices, banks, hospitals, agencies, and local NGOs—to name a few—all will serve as hubs where residents can enroll for their identity numbers. Residents without reliable documents can be “introduced” by a trusted party who can vouch for the person in question.

With a goal of enrolling 600 million people in four years, Nilekani’s bold target may very well become a reality as he aims to set a new standard for excellence in Indian government. But he will face considerable infrastructure, technological, political, and cultural challenges along the way.

Size, scale, and security

The system will need servers capable of handling hundreds of millions of identity verifications every single day, most of which occur in a 10-hour period. Parts of the country are still without reliable electricity, let alone an internet connection. On top of these daunting challenges, the powerful and entrenched Indian bureaucracy is made up of hundreds of different entities that each will be required to update their systems and comply with procedures.

Does India have the capacity to store securely such massive amounts of sensitive data? Many have serious doubts. Although it has quickly become a technology powerhouse in the private sector, India lacks the types of data-protection laws needed to handle modern-day technology security issues. The prospect of human error looms large at every turn. Developers are encouraging the nation’s largest public and private agencies to create their own extensive Aadhaar-based databases and smart cards embedded with sensitive personal information. Unlike a credit card number or name, fingerprints or iris scans never can be changed. If that information is stolen, security may be forever compromised.

The surveillance problem

Enrollment is described as voluntary, but in practice, residents will find it to be virtually obligatory. Many important public and private services have agreed to require an Aadhaar number for participation. If a resident chooses not to enroll, he or she will be denied the basic rights and entitlements they would have previously received for just being a person in need.

Several of the most important public departments rely on the collection of sensitive data—such as race, religion, caste, income, and health—in order to carry out their core functions. States use income information to allocate public goods, and poverty-alleviation programs often target marginalized groups. Though well intentioned, Aadhaar will help to facilitate surveillance and digitized discrimination of whole segments of the population, grouped by their “undesirable” characteristics.

Government officials have expressed interest in using these sophisticated identity databases to solve internal security challenges. One major proposal, recently adopted but awaiting implementation, would combine 21 different databases containing travel, financial, immigration, criminal, and property information from 11 security and intelligence agencies. It is unclear what the developers of Aadhaar, or anyone for that matter, will be able to do to prevent abuses of information by authorities—especially when so many different entities have access to residents’ personal information.

Global implications

The historic Aadhaar program puts India at the forefront of a technological revolution that is quietly reshaping the world. With its massive population, booming economy, and entrepreneurial spirit, India may offer the world the ultimate case study for the perils, promise, and power of digital-identification technologies.

Tarun Wadhwa is a senior research associate with the Think India Foundation, where he analyzes the issues and challenges that India faces due to urbanization. He is currently completing a book exploring the global rise of digital-identification technologies.

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