Aadhaar Bill passed in LS: How Narendra Modi just saved the fate of Jan Dhan and subsidy reforms

Finally, the Aadhaar Bill is a reality. The Bill — Aadhaar (Target Delivery of Financial and other Subsidies, Benefits and Services) Bill, 2016 — was passed in Lok Sabha on Wednesday evening, rejecting the amendments proposed in the Rajya Sabha. In the first place, no one, not even the most hardcore supporters of the Congress and Left parties, dispute the crucial importance of making a legally-backed Aadhaar available for 1.25 billion Indian citizens.
The whole process of subsidy reforms, kicked off during the UPA days and now pushed aggressively by the NDA government, is built on the Direct Benefit Transfer (DBT) channel, based on the unique identity number, or Aadhaar awarded to each citizen. It holds particular importance for the Narendra Modi government, and the success of its financial inclusion push under the JAM (Jan Dhan, Aadhaar and Mobile) trinity.
Leakage in subsidy has been a grave concern for India’s exchequer for years. Hence, linking bank accounts to a unique social identity number will help plug the spillage. Despite the opposition from the Congress and Left parties, the passage of the Aadhaar (Target Delivery of Financial and other Subsidies, Benefits and Services) Bill, 2016 is a done deal now since it was introduced in Rajya Sabha on Wednesday as a money bill.
There are three major objections raised by the opposition parties in Rajya Sabha on Wednesday-the last day of the first half of budget session:
1) Is Aadhaar mandatory for citizens to avail subsidies and government benefits?
2) Will the bio-metric data shared with the government as part of Aadhaar generation put his/her privacy at risk?
3) Can foreign citizens in the country obtain the number and thus become legitimate Indian citizens and use Aadhaar to gain access to subsidies?
These objections are political in nature and do not stand strong against the Aadhaar Bill on account of the following reasons:
One, 99.21 crore Aadhaar cards have already been issued to almost 97 percent of the country’s adult population, so the question of whether the scheme is voluntary or not doesn’t really matter in the practical sense. And though the NDA government has clarified that Aadhaar will not be mandatory, banks are likely to insist on the number to implement DBT to skirt problems arising out of duplication. Even now, if one approaches a bank to open a Jan Dhan account, the institution will accept any document (driving licence, PAN card, ration card etc.) but to link it as DBT account, it will insist on an Aadhaar number.
Two, the NDA government’s modifications to the UPA’s bill has taken care of the privacy concerns of citizens; it lets the government access private information only for issues concerning ‘National Security’. The UIDAI too have repeated that the information will be safe with it as reiterated by former chairman of UIDAI, Nandan Nilekani, in this article in The Indian Express.
Three, the argument that foreign nationals can obtain an Aadhaar number and thus become legitimate citizens of the country is based on a weak premise. Even if someone (say a Bangladeshi migrant) manages to get hold of a number, it doesn’t give him or her proof of citizenship but only proof of individual identity.
A legally-backed Aadhaar scheme is crucial for taking ahead the subsidy reforms in the country. A lot is at stake with Aadhaar – a key reform step initiated by the UPA regime and followed by the NDA – given its critical importance as a unique identification tool necessary to manage rollout of various government schemes and financial innovation in a country of 120 crore population.
The fate of Jan Dhan Yojna, Modi government’s flagship financial inclusion programme is closely linked to the success of the project. Already, some 21.21 crore accounts have been opened under the Jan Dhan Yojana, under which Rs 34,260 crore deposits have been mobilised. Given the primary purpose of Aadhaar is subsidy roll out through bank accounts, legal backing is critical.
It is very unlikely that sharing biometric data with government for Aadhaar will result in serious privacy issues for anyone. The point one must note here again is that Aadhaar is primarily meant to facilitate targeted deliveries of government benefits and subsidies as the Bill itself suggests. In the last year, the Supreme Court had observed that Aadhaar usage should be restricted to the rollout of certain subsidies. But now that the Aadhaar law is enacted, Supreme Court might consider enhancing its scope
The bottomline is this: A legally-backed Aadhaar is a revolutionary step for Indians that can change the way government transfers benefits to the intended beneficiaries in a large verity of schemes plugging the leakages. Ever since the DBT has been used to channelise LPG subsidies, the government has saved Rs 15,000 crore in the last fiscal year.
With Aadhaar gets legal backing, the government can streamline more subsidies and benefits to the intended beneficiaries. It’s a win-win situation for both the government and the citizens. The benefits of a legally-backed Aadhaar far outweigh the currently highlighted concerns by Congress and Left parties.