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Aadhaar-enabled DBT is more demanding than DBT: Reetika Khera

Interview with associate professor, humanities and social sciences department, IIT Delhi

Manavi Kapur  |  New Delhi 

The future of the scheme is uncertain under the new Bharatiya Janata Party-led government at the Centre. Reetika Khera, an economist and associate professor in the humanities and social sciences department at Indian Institute of Technology, Delhi, spoke to Manavi Kapur about the fate of and the possible alternatives to it.

Was necessary for the transfer of welfare benefits?

The public debate has routinely confused different ideas -- Aadhaar, biometrics, cash transfers and direct benefit transfers (DBT). A recent study (by Muralidharan, Niehaus and Sukhtankar) found that biometric smartcards  improve efficiency of payments, but the media reported it as a success of Aadhaar!

(or UID), is the unique number generated by the Unique Identification Authority of India ( UIDAI). Cash transfers refer to the form  of the transfer – that is cash as opposed to in kind. Think of the public distribution system – the government can either provide subsidised food (an “in-kind” transfer) or it can give cash so people can buy the food themselves (a “cash” transfer). Cash transfer programmes include government schemes such as old age pensions, maternity entitlements and so on, which are very welcome.

On DBT, there is more confusion. For some (like me), is just another word for electronic bank transfers – payments through accounts linked to CORE banking (which is the norm for us). For others, is actually “Aadhaar-enabled DBTs” –electronic transfers plus linking (or “seeding”) bank accounts and databases of welfare beneficiaries using the For yet others, is the new proposed design for transferring subsidies: the subsidy (on, say, kerosene) is credited into your account and kerosene is bought and sold at the market price.
I think of as electronic payments. This move is mostly very welcome as it provides a huge safeguard against corruption. The only drawback is that access to banks and post offices linked to CORE banking is still quite thin in rural areas.

What are the loopholes in the Aadhar card and UID number system, both as an identification mechanism and as a tool for distributing welfare schemes, in its present form?
The main problem is that the benefits of using UID for welfare schemes were always exaggerated. For instance, the National Rural Employment Guarantee scheme  was premised on the belief that wages are paid in cash (which is prone to corruption). In fact, since 2009, payments are routed through bank and post office accounts.  Wage payments through banks with CORE-banking provide as good a safeguard against corruption as can. Post office payments remain vulnerable to corruption and the solution lies in modernising post offices, for example providing CORE banking.

Where did fail in that the government wants it removed? Why would it have not worked? Is it merely politics driving this decision?

For you need all beneficiaries to have a core banking account. That is where the focus should be — expanding the modern banking sector, especially core banking in rural areas. DBTs do not need

What the government had in mind when it spoke of is actually “Aadhaar-enabled DBT” to transfer cash or subsidy. That requires three things: a modern banking sector to which beneficiaries have access; number for all beneficiaries; and seeding bank accounts with Only when all three are in place, can Aadhaar-enabled DBTs proceed. Eight months after was launched, 56 per cent of beneficiaries had a bank account; 25 per cent had an account and Aadhaar; but only 9.6 per cent had all three. This caused havoc — it made compulsory for cash transfers, leading to exclusion on a massive scale. For example, many elderly people stopped getting their pension in Jharkhand. Other pilots have also failed — NREGA payments (in Jharkhand) and LPG subsidy transfers (Karnataka).

Aadhaar-enabled is a more demanding system than DBT, without any added benefits. From the point of view of DBT, the removal of is a welcome step. But if is going to be replaced by a more sinister project, the debate is far from over.

The data already collected will be vulnerable to misuse. What are the ethical and logistical challenges in collection and storage of such private biological parameters?

There are numerous counts on which objections have been raised against the project -- civil liberties, data security, data mining, privacy, lack of any legal safeguards and so on. Important among them is the creation of a centralised database of residents that could/would potentially be linked to other databases, such as those created by “security agencies”. In this sense, UID and (NPR) create an infrastructure that can be misused.

Let me give one example of the legal vacuum in which this project is operating. Hearing a petition against UID, the Supreme Court learnt that there is no law, no contract; further, biometrics (fingerprints, iris scans) are classified as “sensitive information” by the rules framed under the IT Act 2000 and these cannot be handed around.

What are the other repercussions of scrapping the scheme?
The scrapping of Aadhaar, if it happens, is bound to raise questions of the expense incurred on it. There are at least two ways to look at this. One, did work that would eventually have been done by the Census office for the NPR. Two, one cannot throw good money after bad money. To the extent that the UID project was a waste of money, it is better to cut our losses now than to pour more money into the project.

Can the existing be modified for bona fide use? If not, what is a possible alternative?

was clear that it was for all residents. NPR, however, is based on citizenship. That is the real danger of merging with NPR. It will become an exercise in harassing poor people. If registration in NPR is made compulsory, and people are required to prove their citizenship, it will formally create a category of “second class” citizens. It is not difficult to guess who will fall into that category.

First Published: Sat, June 28 2014. 21:11 IST