If Nandan Nilekani is confident he can deliver India’s first unique ID card in just two years, it’s because he’s been thinking about it for a long time. Excerpts from his book, Imagining India
A big source of heartburn for those running banks, managing elections and regulating the stock market in India is that the country is filled with people who are virtually invisible. ‘The one thing that gives me sleepless nights,’ ICICI’s Madhabi Buch tells me, ‘is the inability of us Indian bankers to put a name to a transaction.’
Today Indians can have a multitude of numbers with which to identify ourselves, depending on when and where we interact with the state. When we get a passport we get a passport ID, a ration card gets us another number, when we pay taxes we need a permanent account number (PAN), when we register our vote we get a voter ID card, and on to barcode infinitum. ‘Our databases are in these disconnected silos,’ the chief election commissioner N Gopalaswami says. This makes zeroing in on a definite identity for each citizen particularly difficult, since each government department works a different turf and with different groups of people. The lack of a unique number has given space to plenty of phantoms — in voter lists and in below poverty line (BPL) schemes and holding bank accounts with multiple PANs.
India’s ministries and departments are also quite isolated, with separate fund flows and intricate, over-hyphenated authority levels. As a result these systems require paperwork-choked processes each time citizens approach the state. A common technology and process platform for government schemes and departments — especially now that they have such large budgets — would be a huge improvement in coordinating information between departments, and getting rid of redundancy and triplicate forms. Identity systems linked up with an IT-enabled process that interlinks our various departments would, besides making citizen information and identity more verifiable, make the relationship between the state and the citizen infinitely less traumatising in both time and energy wasted.
Such a ‘national grid’ would require, as a first and critical step, a unique and universal ID for each citizen. Creating a national register of citizens, assigning them a unique ID and linking them across a set of national databases, like the PAN and passport, can have far-reaching effects in delivering public services better and targeting services more accurately.
The use of IT and the rise of such unique number systems are closely correlated. In the United States, for instance, the Social Security Administration (SSA) was the first federal bureaucracy to require the use of computers, because of the overwhelming complexity of processing the social security numbers and data of its 200 million plus citizens. The bureaucracy was a massive complex of wall-to-wall file cabinets managed by hundreds of clerks. It was the early IBM 705 computer that helped transform and streamline it. This mainframe approach quickly spread to European bureaucracies in the 1960s and 1970s. The transparency and flexibility of such computerisation also enabled other reforms — such as laws that introduced individual citizen accounts for benefits and welfare payouts. In China as well, IT has helped the government transform its social security systems from a local network to a national, increasingly interlinked process.
In India the government has made some attempts towards such a single citizen ID number. This had a lot of traction in the previous NDA government as well, albeit for reasons that were less financial — they saw it as a way of identifying illegal aliens and refugees.
Too often though, we see issuing smart cards as the main challenge of implementing such a system. But building these intelligent little stripes is the easy part. It is in making the back-end infrastructure secure and scalable, providing a single record keeper for the whole country and integrating the agents who issue these numbers that it gets tough.
To do this, we need a sustained and multi-pronged effort that cuts across governments as well as companies. For example, issuing this number to each citizen, say, during a census would be extremely onerous, as it is a painful task prone to errors as census officials spend long days walking through neighbourhoods and knocking on doors. It would be a lot more effective to issue these numbers when citizens come to the government. This would mean issuing citizen IDs when individuals come to a public office for an identification document — a passport, birth certificate, caste certificate, driver’s licence — when they come to collect a benefit such as a BPL card or when they have to make a financial transaction, such as pay taxes, open a bank account or buy into a mutual fund.
Each of these paths to identifying the citizen and bringing him into the database would cover different pools of people. The PAN covers all tax payers, voter IDs all registered citizens over eighteen, birth certificates all newborns and BPL cards the poor. Using the databases to issue IDs to different groups of people means that the initiative would ramp up to near-universal, accurate levels very quickly.
A national smart ID done at this level could, I think, be transformational. Acknowledging the existence of every single citizen, for instance, automatically compels the state to improve the quality of services, and immediately gives the citizen better access. No one else can then claim a benefit that is rightfully yours, and no one can deny their economic status, whether abjectly poor or extremely wealthy. More than anything else, this recognition creates among all parties concerned a deeper awareness of their rights, entitlements and duties. It becomes far more difficult for both the citizen and the government to dodge any of these.
A key piece of infrastructure that must sit on top of an interconnected grid is the electronic flow of funds. This will require that each uniquely identified citizen or organisation has a financial account into which money can be transferred from the state. This could be an account in a bank, a post office or with a self-help group. And within this system, the ID smart card can function as a mobile, non-transferable electronic passbook.
My guess is that the impact on inclusive growth and India’s savings rate from implementing this would be massive, considering that an estimated 80 per cent of Indians today do not have a bank account, and therefore lie outside any sort of banking system besides perhaps the one represented by the exploitative moneylender and his steel box of cash. ‘The weakest aspect of India’s economic reach is financial access,’ Dr C Rangarajan agrees, ‘and its impact on inclusive growth has been severe.’ For instance, people need savings to invest in education, spend on health care, or to feel secure enough to move to a city, leaving their home and land to take up jobs in a place where they have no real assets.
Linking smart cards to such accounts can open up the banking system to hundreds of millions more people. It also introduces the possibility of offering direct services, from pension and benefit payments to trading accounts to an unprecedented number of people.
Excerpted from Imagining India: Ideas for the New Century by Nandan Nilekani.
Publisher: Allen Lane (Penguin India). Hardcover Rs 699, page extent: 520