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Mar 01, 2013 at 12:15pm IST

UIDAI chief Nandan Nilekani attends NAC meet on Direct Benefit Transfer

The Direct Benefit Transfer initiative of the government came in for discussion and scrutiny in Sonia Gandhi led National Advisory Council on February 26. Mr Nandan Nilekani, Chairperson of UIDAI, sought to assure members that Aadhaar will not become a tool for exclusion. After the meeting Aruna Roy, one of the foremost critics of the Direct Benefit Transfer initiative said, "we think it is one of the biggest mistakes this country is making i.e. linking Aadhaar to welfare delivery". Mihir Shah, who also participated in the meeting said, "the same concerns seem to be reflected on both sides about managing the transition which is the real problem that is coming in".

Reproduced below are the issues raised by Aruna Roy at the meeting:

The UID must not be compulsory

The UID claims to be voluntary method of proving identity but has now become compulsory for anyone seeking government services or social sector entitlements.

Direct Benefit Transfers (DBT) only adds more hassles without providing benefits to the beneficiary - The new architecture of using the UID to access existing cash benefits through the bank has only added an extra layer of complicated and complex procedures and has burdened both the programme as well as the beneficiary with little apparent advantage. As of now, this is being tested out in a miniscule number of schemes but plans clearly exist to impose it on the large delivery schemes such as MGNREGA, Rations and Pensions where it will never work and cause complete havoc. Beneficiaries are not receiving anything new through DBTs. The difference from before is the requirement of a mandatory UID number and biometric authentication for both the application process and for use each time they receive a benefit. Any shortcoming in the process can result in beneficiaries losing their entitlement

Dismal performance in two months of roll out: Despite the effort to depict it as a game changer, and deployment of huge resources and government machinery, the success rate has been dismal and pathetic. Two months after the roll out in 20 pilot districts, the total amount of money transferred nationally has been just 5.5 crores through the Aadhaar based payment network. In Ajmer district for instance, out of approximately 20,000 potential beneficiaries, only approximately 220 beneficiaries have so far received money in the bank through the Aadhaar based Payment Bridge. None of them as yet have received money through a biometric identification system. Therefore, in fact the Aadhaar system has had zero success till date. This is despite the fact that the number of schemes taken up initially have been small and therefore should have been manageable. In the Janani Suraksha Yojna for instance, only a 139 women, out of approximately 1400 who have delivered children in the hospital have received money in the bank through Aadhaar. Even their payment has been made without biometrics.

Even if biometrics were a 100 per cent efficient and workable the Aadhaar based payment network will clearly take decades before it will cover its targeted beneficiaries. This is because enrollment is very slow, banking infrastructure is very poor and the existing short-comings of the scheme are only compounded by the complications created by this new requirement. When DBT is expanded to cover programmes with a large number of beneficiaries such as NREGA and pensions, it is likely to result in huge exclusions and delays. This anticipated problem is now sought to be overcome through the appointment of 1 million banking/ business correspondents (BC) to reach the money to the poor. The BC can by design be anyone for example, a kirana storekeeper, a selfhelp group, or any individual who manages to get selected. To the extent that these are tried systems, they have not worked. It is a system that will create middlemen and agents with very poor accountability. However, by rolling it out in order to make the UID based payment system viable, there will be huge costs to the state exchequer as well as the poor of this country.

Add to this the problems of biometric identification and it becomes clear that it must be immediately dismantled if the poor are to receive their benefits

Serious problems with the BC model (micro-ATMs)

1. The complete lack of accountability of the BC

2. The technical problems with biometric authentication to cover a 100 per cent of the beneficiary population.

3. The need for online authentication where every transaction is sent in real time and an authentication received even in some of the most remote parts.

4. Because this is a closed system which requires 100 per cent efficiency and verification - in the enumerable cases where the system fails, the solution has been to offer manual override through a variety of means. The fact is as soon as you use manual override in such a closed system, it institutionalizes potential leakage and fraud. You get the worst of both worlds - the huge harm, cost, and burden of new all encompassing authentication system and the inability to properly monitor the programme itself.

Net result is exclusion: making access to entitlements for the poor that much more difficult, and in certain cases, excluding them all together.

Experiment on the poor: This technology is untried and to experiment on the poor is unjustifiable and because it is de-facto compulsory it is also unconstitutional.

Failed experiment being pushed through: The roll out is clearly beyond the stage of experimentation, and is being continued despite abject failures.

Facilitating Cash transfer, abdication of responsibility of government to deliver : One possible motive for doing this in the welfare sector is to allow the provision of goods and services to be replaced with cash. In many spheres, including the PDS, people in government have been saying that they are unable to deliver efficiently, without corruption and they would prefer to transfer the cash rather than provide the goods or service. If the government were to replace goods and services with cash, it would clearly be abdicating its fundamental responsibility to deliver.

Feasibility: No standards have been set to determine feasibility. Current proof of concept studies are being conducted by the departments themselves.

Functioning outside of a legal framework: Recommendation of standing committee have been ignored, and the UID system pushed through at an alarming speed and scale in a legal vacuum despite objections from parliament.

The potential for people and communities to be profiled: Eventually, whether or not this helps in being an efficient delivery system, the aadhaar biometric identification will open up the possibility of profiling individuals and communities in an unacceptable manner. Separate silos of information can now easily be merged, and the information misused. This would also pose a fundamental threat to our democratic fabric and affect the fundamental rights of citizens.

Monitoring in the hands of machines and not local communities: Even the de-duplication being claimed has to be examined. So far, no action seems to have been taken against anyone who has used duplicate identities to pilfer benefits. This method of monitoring does not allow immediate local action and it takes places the entire system in a mode of monitoring far removed from the beneficiaries themselves.

Only UID technology being used to the exclusion of other alternative technologies: This is not to say that technology is not useful if used appropriately and wisely. However, the Aadhaar system has no place for any alternative technologies like smart cards or localized biometrics. In many cases these maybe more appropriate and better but the centralized Aadhaar monolith cannot make space for such innovation or practice.

Aruna Roy and Mihir Shah spoke briefly to CNN-IBN's Rupashree Nanda after the meeting.

CNN-IBN: Why was Mr. Nandan Nilekani present at the NAC meet?

Aruna Roy: Nandan Nilekani came to brainstorm with the nac. He was supposed to meet us long ago and he hadn't. We all expressed our diverse, different opinions as usual. Many agreed on some issues, many did not agree on some issues. There were all issues about implementation which were expressed. Some approved, some disapproved but this was not an NAC meeting.

CNN-IBN: What is your position?

Aruna Roy: You know my position very well. We think it is one of the biggest mistakes this country is making i.e. linking Aadhaar to welfare delivery. So many of us have written about it, have talked about it. Position holds.

CNN-IBN: Is the NAC divided on this?

Aruna Roy: This was not an NAC meeting. As individuals we have different opinions, some of us agree, some of us don't agree.

CNN-IBN: What was Mr Nilekani's presentation about?

Mihir Shah: Nilekani's presentation was on the Direct Benefit Transfer scheme and the use of Aadhaar in it. And he was very responsive to the concerns of NAC members. The essential concern, I believe is that we need to manage the transition well. There is a situation today when not all beneficiaries of government programmes have Aadhaar numbers. There is no internet connectivity in large parts of the country. The other concern was people should not be denied benefits if they do not have Aadhaar numbers. The transition to a situation where everyone has Aadhaar numbers, bank accounts, and internet enabled bank accounts has to be managed very carefully. This could become means of exclusion rather than inclusion. I must tell you that the chairperson of UIDAI, Mr. Nandan Nilekani was very clear in his mind there should be no denial of benefits of anyone who does not have an Aadhaar number. In fact, he went to the extent to say that if a person does not have fingers or irises there will be what he called a manual override. Given that that is also a possibility, I don't think we should be apprehensive about the problems caused by Aadhaar in the direct benefit transfer by the government.

CNN-IBN: There are questions about the fact that Aadhaar now exists in a legal vacuum?

Mihir Shah: What Mr Nilekani said was that the present legal status of the UID does not prevent it from doing what it is doing today. The legal part of it which is yet to be enacted in parliament (in fact he asked the NAC to help him expedite the process) does not actually come in the way of doing the work that the UIDAI authority is doing today.

CNN-IBN: Is the NAC divided?

Mihir Shah: At least from the meeting today, I got the impression that there is far greater unanimity than I had imagined myself. Because, I think the concerns are shared. And the concerns are also shared by the UID. I think the same concerns seem to be reflected on both sides about managing the transition which is the real problem that is coming in from Kotkasim and all other examples that are being cited. The problem is that if people don't have bank accounts, if they don't have Aadhaar numbers obviously you cannot use this architecture to use this scheme. But once you do, a large number of NAC members feel that it is a good initiative.

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