Aadhaar in eligibility identification - a reality check

There is no doubt that Aadhaar has been a game-changer and a market catalyst in many areas of the Indian economy. The India stack has been truly transformational in areas like fintech. But what about its role in welfare services delivery?

When conceived, one of the primary motivators of Aadhaar was the need for a unique identifier to enable more effective targeting welfare benefits. Then, state and central governments in India were grappling with the problem of egregious inclusion errors - duplicate and non-existent beneficiaries for various schemes, especially the Public Distribution System (PDS). Aadhaar was thought to be the solution to this problem.

And it cannot be denied that Aadhaar has nearly eliminated the issue of duplicate or bogus (the person itself not alive or existent) through enrolment and physical screening. However, sceptics argued that in the process of Aadhaar screening, significant numbers of eligible poor would be screened out, as a collateral damage. But it was thought that over time - as technology improved, databases got cleaned up, stakeholders got used to it, and redressal mechanisms were streamlined - this problem of exclusion errors would disappear. Unfortunately, that has not proved to be reality.

The real problem lies in the use of Aadhaar in the targeting of beneficiaries, especially through screening them out by linking multiple databases. It was all along known, though not explicitly acknowledged and clarified by all concerned (including the government), that beyond elimination of duplicates and non-existent beneficiaries, in the Indian context Aadhaar's role in targeting was limited.

The supporters of Aadhaar argued that, apart from the duplicates and the non-existent, it could provide the accurate unique identifier that can help link multiple databases on employment, vehicle registration, tax payments, electricity consumption, bank loans and so on. This, it was claimed, could be a game changer in targeting social benefits. 

The problem with this argument/claim lies in the quality of the validating databases. Apart from 10-20% of Indians who are either employed, or own vehicles, or have taken loans, or purchased property, the vast majority have no formal signatures of their existence. In other words, at least 80% of Indians have no formal database on which they exist reliably so as to be used for Aadhaar-based validation. 

In this scenario, the government ends up using various questionable datasets for Aadhaar screening. Governments also force people into various formal database inclusion requirements so as to generate digital trails for subsequent Aadhaar validation. 

Most importantly, since their primary objective is to eliminate inclusion errors, none of the various software applications of state and central governments to enrol and process welfare schemes do not have  the requisite safeguards to prevent egregious exclusion errors. This is a manifestation of the inclusion errors elimination bias within governments. I blogged about it here. 

Finally, and surprisingly, technology itself has not held up well and has been a major contributor to the problems with Aadhaar implementation. The apparently simple activity of biometric validation - biometric capture, validation with Aadhaar database, and the data communication - has its struggles, especially but not only in the rural areas of the country.

The consequences of all these efforts to use Aadhaar in welfare services delivery end up doing great damage, often more than offsetting their beneficial effects. 

A recent article in the Indian Express points to the problems with Aadhaar-linked validation on accessing PDS and other welfare schemes benefits. It reproduces the salient findings of a Lokniti-CSDS Survey conducted during the 2019 LS elections.

And the denials rates were very bad in the Bimaru states,

The survey findings speak for themselves and presents strong evidence to support the concerns about the unqualified use of Aadhaar in welfare services delivery, especially in targeting. I've blogged earlier on Aadhaar's targeting challenge here. 

The point here is not to advocate abandoning the use of Aadhaar in welfare services delivery. Instead it is required to acknowledge the limitations of Aadhaar and the potential damage it can cause, use it where it serves the purpose, and also put in place mechanisms to address them while using Aadhaar. 

I have been surprised about the absence of good research which points to the collateral costs of Aadhaar-linked targeting. After all, it only required some surveys. It's also perhaps a testament to the misallocation of social sciences research priorities in and about India that issues of first-order importance not only get little or no attention but also get marginalised by bandwagon studies conducted by foreign researchers (which unfortunately only ends up fuelling the dominant but misleading narratives). 

It's interesting that these findings have come as a collateral benefit from an election survey conducted by an opinion polling agency, and not from mainstream research. 

See also this oped by Jean Dreze on the absence of a mechanism for poor for grievance redressal if their benefits are terminated due to Aadhaar validation problems.