Identifying India as a leader in the biometric identification system, the IMF, in its fiscal monitor report on digital governance, released here on Thursday said digitalisation can facilitate stronger governance, fiscal transparency and better scrutiny of the budget process.
"With more than 1.2 billion registered citizens in India's biometric identification system, Aadhaar, the country stands out as a leader in this area," the report said.
"A court decision is still pending on its compliance with the right to privacy. In a recent data breach in India, it has been reported that 135 million Aadhaar numbers were compromised, underscoring the importance of sound privacy measures," it added.
The multilateral lender said the lack of security controls makes the Indian Unique ID system vulnerable to breaches.
"Advocates of the system assert that Aadhaar is compatible with the right to privacy because the captured biometric traits are encrypted, making it difficult for anyone who intercepts these images to access the actual content," it said.
"However, the lack of sufficient security controls makes the system vulnerable to unauthorised access."
Earlier this month, the Indian Supreme Court ruled that the supposed deemed consent for parting with biometric data cannot be stretched to mean waiving of fundamental right to privacy.
The court made this observation as the government sought to defend the data collected from 2009 to 2016 on the strength of administrative orders and without obtaining the consent of the people on the collection and storage of their biometric and demographic data.
A five-judge constitution bench is hearing petitions challenging the validity of the Aadhaar scheme on the touchstone of the right to privacy.
Last month, the government extended the deadline for linking Aadhaar with the disbursal of benefits including subsidies under the social welfare schemes by three more months, till June 30. The earlier deadline was March 31.
The decision came a day after the government also extended the deadline for linking Aadhaar with Permanent Account Number for the fourth time till June 30.
In March, the Supreme Court extended the deadline for linking of various services with Aadhaar till it delivers its judgment on petitions challenging the constitutional validity of the biometrical identification scheme.
The government has also extended the last date for re-verification of mobile connections through Aadhaar based E-KYC process till the Supreme Court's verdict.
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