Sunday, November 14, 2010

What the UID will not do

I have blogged earlier about the numerous exciting possibilities offered by the UID project in radically enhancing the ability of governments to effectively deliver the myriad government welfare programs and subsidies.

The importance/uniqueness of the UID is in vastly expanding the ability of governments to more accurately target and deliver a much wider range of subsidies. More specifically, UID-linked bank accounts create the channel to deliver subsidies as a cash transfer directly to the individual. However, it needs to be clearly borne in mind that the UID is not a panacea for every welfare benefit delivery problem. It is only an improvement, albeit a major one, on the existing welfare delivery channels.

This message assumes importance in view of the increasing number of articles that have been appearing expressing apprehension at the persistence of delivery channel failures even after the UID is implemented. It needs clarification that these peristent failures are less an indictment of any inadequacy of the UID number and more a testament to the complexity of delivering welfare assistance in such massive scale and under complex socio-economic environments as we have in India.

In any case, here are a few major generic problems that will persist even after the implementation of the UID project.

1. It will not, atleast in the initial stages, contribute much to the accurate identification of beneficiaries (or means-testing). The list of beneficiaries eligible to receive the benefits will have to be determined following a purely administrative process. So, even after implementation of the UID project, the problem of ineligible beneficiaries availaing of welfare benefits will remain.

However, as the database grows and becomes more universal, it becomes possible to leverage the network effect (arising from membership of larger numbers of specific categories of programs) and screen out atleast the ineligible applicants.

2. As a corollary, the UID can be of only limited use in covering all the excluded eligible beneficiaries, which is a major problem with programs like the PDS.

3. UID will not address the last-mile leakages. Thus the leakages by way of under-weighment at the fair price shop of the distributed rations or reductions in the amounts paid out as welfare pensions or NREGS wages (at the cash disbursal point by the Business/Banking Correspondent, BC) cannot be avoided.

4. It cannot certify the quality of works carried out under wage-employment programs like the NREGS. Further, it cannot also address leakages by way of, say, man over-reporting (extra man-days claimed), unless the attendance at the work site is taken by UID authentication.

5. Even if the dual-price mechanism is dismantled for foodgrains, petrol, diesel, and fertilizers, and an arrangement to transfer the subsidy to the UID-linked bank account of the individual is introduced, the possibility of market manipulation by wholesalers and retailers to restrict supplies and/or increase the prices for fertilizers and food grains will remain.

7 comments:

Anonymous said...

As rightly pointed out, there are a lot things that UID cannot change. But the greatest immediate achievement will be giving identity to millions of marginalized citizens. All of them may not immediately benefit from the welfare measures but would be possible to quantify the extent of their exclusion at any given time.

The number of ineligibles signing up for entitlements will decrease once they know they their participation will be linked to UID. Similarly, linking all property registrations to the UID of the buyer will be very interesting.

On another note, what do think about imposing tougher book keeping and reporting requirements on contractors and firms working on public works or do business with government? That all their transactions should be made out of draft or electronic payments; file taxes and report financial statements on quarterly basis; and that all wages should be paid in check or direct deposit and require all the employees to link to UID. The assumption is that such stipulations will deter the firms from many of the wrong doings they are used to.

Jayan said...

(Something wrong? I cannot see the old post referred in the starting line)

Aadhar is one of most hyped up projects in India. It is supposed to be positively affecting millions of poor to start with and then reaching all others on need basis. Having a 'UID' is the starting point. My guess is Aadhar is really going to be more useful for middle class and agents working for them. Home/Personal Loan, Credit cards, Gas connection, Healthcare -- The UID will make thing more cost effective and efficient. Aadhar would also improve quality of the metrics collected. At best, helping poor can be a positive side effect. (Just like mobile phones, Computerised banks, Internet, ATM ...)

For poor to benefit, the ecosystem around real service providers like PDS, Electricity boards , lowest-level-administration etc(basically all that interact directly with poor) should change their mind-set. As you wrote it helps the delivery mechanisms; what to be delivered is completely another area. The real issues in efficient administration are transparency and accountability. Technology has only multiplicative effect. If some thing is zero, nothing can be achieved! A good example is in today's 'The hindu' --http://www.hindu.com/mag/2010/11/14/stories/2010111450010100.htm . This describes a systemic change in PDS, aided with technology.


Offtopic:

A project of this magnitude and possible impact is least discussed in Inda. If the ecosystem around Aadhar is leaky it can wreck havoc with anyone who wants to fight against the powerful. A trade-union leader, environmental activists, Freedom fighters, RTI activists... all need to be worried. Aadhar itself does not hold anything about people, so it is safe. We cannot be so sure with other agencies.. especially law-enforcing ones.

It is sad that Aadhar leadership is not engaging 'common man' in any of discussions. I recently came to know the initial interfaces of Aadhar is locked onto Microsoft's windows solution. When Kerala requested linux based biomometric-capturing software, they were asked to wait three more months. (Unlike other govt projects, I hope to trust this answer.. hope it is not going to be too late!).

Links:
http://ibnlive.in.com/videos/132018/does-the-uid-scheme-violate-democratic-rights.html
http://www.thehindu.com/todays-paper/tp-opinion/article864107.ece

Jayan said...

Part-2
--


Offtopic:

A project of this magnitude and possible impact is least discussed in Inda. If the ecosystem around Aadhar is leaky it can wreck havoc with anyone who wants to fight against the powerful. A trade-union leader, environmental activists, Freedom fighters, RTI activists... all need to be worried. Aadhar itself does not hold anything about people, so it is safe. We cannot be so sure with other agencies.. especially law-enforcing ones.

It is sad that Aadhar leadership is not engaging 'common man' in any of discussions. I recently came to know the initial interfaces of Aadhar is locked onto Microsoft's windows solution. When Kerala requested linux based biomometric-capturing software, they were asked to wait three more months. (Unlike other govt projects, I hope to trust this answer.. hope it is not going to be too late!).

Links:
http://ibnlive.in.com/videos/132018/does-the-uid-scheme-violate-democratic-rights.html
http://www.thehindu.com/todays-paper/tp-opinion/article864107.ece

gulzar said...

thanks jayan...

anon, i completely agree with ur proposal for "tougher book keeping and reporting requirements on contractors and firms working on public works or do business with government".

this is again a classic case of piecemeal policy-formulation. the e-procurement process, which brings together the tendering process of all contractors under the same umbrella, should be extended to have a single registry-cum-monitoring source for contractors and firms. it is only then we capture the full benefits of transparency in tendering process.

sai prasad said...

More and more reporting ?..are we developing a '1984' like situation ?
Can u really do it ? Do u want to hand over your life to the govt ? Really ?

sai prasad said...

UID can only be as good as the data collection mechanism. How do u propose to do that ? Overnight ?


I certaily would not want to keep something like welfare in the hands of the private sector.

gulzar said...

sir, i am aware of the data security and privacy related concerns. but is that reason enough to reject UID? or should we have mechanisms to mitigate these fears?

administration of the UID, especially the enrollment process and its use by the registration agency, could throw up formidable challenges.