India’s Aadhaar System: Bringing E-Government to Life
Nandan Nilekani, Co-founder of Infosys and EKStep, on how building a digital public infrastructure is key to a resilient society.
An Identity that Works for Everyone, Everywhere
These measures were on a scale unmatched by any other programmes within or outside India, stress-testing the country’s digital public infrastructure. Such a scale was made possible by having reliable data about the intended recipients of the medical aid, financial aid, and vaccinations. This authentication system of India’s is called Aadhaar, which means foundation in many Indian languages.
India’s health secretary Rajesh Bhushan called Aadhaar “the most reliable authentication system to track (vaccine) recipients”.
A Trusted Digital Identity System
As a digital identity system, Aadhaar allows governments, civil society, and businesses to trust that the person they are transacting with is truly who they claim to be. Aadhaar collects basic information about a person, providing multiple channels for authentication of this information using distinctive identifiers, such as biometrics and a Unique ID for each user.
Aadhaar at a Glance
In 2009, when Aadhaar was conceptualised, it was estimated that roughly 400 million people in India did not have an individual identity document, while only 17% of India’s population had bank accounts. Although around US$ 50 billion was being spent on subsidies, diversion and leakage was rampant (in the range of 10-60%, depending on the programme).4 What India needed was a safe, secure, reliable way to give a unique identity to its 1.2 billion5 (and fast growing) population, some of whom had no documents to prove who they were.
The Indian government earmarked Rs 100 cr (US$ 13m) and created a position of chairperson, one that was equivalent in rank and status of a cabinet minister, to kickstart its ambitious Unique Identification Project.6 This newly-created entity, Unique Identification Database Authority of India (UIDAI), could work independently under the government in ways that were not tried before. Many volunteers with domain expertise were invited to create the Aadhaar system, and they brought in their understanding of design thinking, architectural know-how, operations, and even data privacy to help design a secure and scalable system.
Twelve years on, Aadhaar has now documented the identities of more than 94.2% of India’s population,7 providing each of its users with secure, digital identity that can’t be lost or faked. For millions, their Aadhaar numbers were their first proof of identity, which meant they now had a way to belong.
Aadhaar also drastically reduced the cost of identity trust from US$ 10-20 per transaction to US$ 0.27.8 This gave millions of Indians direct access to government subsidies (rations, social pensions, cooking gas, fertilisers, etc) without having to rely on middlemen, the ability to access affordable formal financial services (like bank accounts) for the first time, and a way to prove their existence to access fundamental rights (like voting, free education, jobs, etc) for the first time. Such a development, in turn, has the ability to unlock large economic value in India (between 3-13% of GDP), as per estimates by Mckinsey.9
For the Indian government, Aadhaar has reduced the cost and leakages from running the world’s largest social subsidy programmes. The Digital Dividend Report prepared by the World Bank estimates that India can save US$ 10 billion every year through the use of Aadhaar.10
Lessons From Aadhaar: What Makes a Digital Public Infrastructure Work at Scale
Digital public infrastructure needs to be minimalistic in nature: it does one thing and only one thing well. For example, Aadhaar’s sole purpose is to provide a unique identity to a billion people, and be able to verify that identity digitally. Aadhaar collects minimal data required to establish the uniqueness of an individual (four key demographic elements — name, gender, date of birth, and address — and biometric data), and it only guarantees identity — not rights, benefits or entitlements.
For a digital public infrastructure to work, every interaction with the infrastructure needs to be trustworthy — the owners of data have to trust that their data is safe and the users of the data have to believe that every interaction will generate an answer that can be trusted. Since each Aadhaar number is generated through a process of biometric de-duplication, the uniqueness of each citizen’s identity has a degree of accuracy of more than 99%.11 In fact, a pulse survey with 148,000 households across 28 Indian states and union territories found that citizens trust it so much that Aadhaar is becoming India’s default identification for accessing government as well as private services; 90% of people trust that their data is safe in the Aadhaar system and 95% of those who don’t have an Aadhaar want to obtain it.12
Resilient and trusted systems are not systems that don’t break, rather, they are systems that function under failure. Governments, businesses, and civil society have used Aadhaar authentication across the education and public food distribution systems, for fertilizer subsidies, for social protection, and banking, etc, through more than 57 billion authentication transactions, and the system has been able to return a biometric match in 93.5% of all cases.13 The Aadhaar system provides alternate authentication methods such as One-Time-Pin and recently, facial authentication. If these verifications fail, the Aadhaar Act and regulations empower service providers to nonetheless provide their services. The data of the failure event is captured through telemetry (automatic recording and transmission of data to an IT system in a different location), which helps constantly monitor the efficacy of the authentication process as well as to improve it.
Low-income and vulnerable populations usually have little or no access to documents that can prove their identity, so a digital public infrastructure needs to ensure inclusion for the most vulnerable in the way data and processes are structured and executed. In India, many people have no knowledge of their exact date of birth or have no documentary evidence. To ensure no one is excluded due to this, the Aadhaar system allows either age to be captured or a full date of birth to be captured when available.
Similarly, the concept of ‘introducer’ was created to aid people who have no proof of address or identity. This allowed residents with no documents to be introduced by a valid listed ‘introducer’, such as a local village leader or head of family, who already possessed an Aadhaar number and could personally vouch for the individual’s identity.
Protecting the privacy of individuals should be a key design element of digital public infrastructure — not an afterthought. For instance, the Aadhaar number is a random, 12-digit number with no built-in intelligence or profiling information (like sex, place of birth, date of birth, etc). Just by looking at the Aadhaar number, one cannot figure out who owns the number. Since the Aadhaar system has data of all of India’s Aadhaar holders in a central repository, it was essential that data be kept to a minimum to provide only identity-related functions (issuance and authentication), and not be linked to any other database. Authentication of an Aadhaar card by a third party involves only a yes/no answer to a person’s identity claim; it can’t provide any other information about the person, such as their bank account details, religion etc.
To succeed, a digital public infrastructure needs an ecosystem of partners that collaborate to enable key components of the project, and another set of innovation partners to build upon it to create more value for its recipients. Aadhaar is one of the key components in the creation of IndiaStack — a set of Application Programming Interfaces (APIs) that allows governments, businesses, startups, and developers to utilise a unique digital infrastructure to move India towards presence-less, paperless, and cashless service delivery.
Given the country’s diversity and vastness, it was imperative for the Aadhaar system to leverage the existing infrastructure of government and private agencies across India. The project had ecosystem partners, like enrolling agencies in each state to perform field enrollments, agencies to train and certify this cadre of enrollment officers, agencies to provide accurate devices, as well as a technology backbone to hold this partner ecosystem together. Many applications were then built by the ecosystem of innovators on top of Aadhaar, like the Aadhaar payment bridge to send money to an Aadhaar number. This particular innovation served as the backbone of the Digital Direct Benefit Transfer in India, allowing the government to reach the user directly instead of building layers of middlemen to physically move the money.
COVID-19 has highlighted the urgent need to improve delivery of public services in order to reach each and every citizen at the right time, rapidly, and in the most efficient manner.
As the pandemic pushes more people under the poverty line, it’s time to create exponential change through a platform approach — a societal platform approach. How do we build a future in which the solutions we have access to are always a step ahead of the problems we are trying to solve?
Aadhaar can serve as a case study for democratising technology for the world’s next six billion with its inclusive, accessible and low-friction platforms in service to all, including the most vulnerable. This was one of the motivations for our work around societal platforms, applying these principles to improve outcomes for education, health, livelihood, gender equality and more, not just in India but in the rest of the world’s emerging economies.
Platforms give you an ability to:
Reduce
Cost
Amplify
Scale
Increase
Trust
As the pandemic pushes more people under the poverty line, it’s time to create exponential change through a platform approach — a societal platform approach. How do we build a future in which the solutions we have access to are always a step ahead of the problems we are trying to solve? That is the question that we are trying to answer.
Looking Back...
A project of Aadhaar’s size and impact was bound to meet some challenges along the way.
- Mission challenges: Aadhaar is one of the biggest biometric databases in the world, so ensuring privacy was a must. India’s lack of privacy laws meant the Aadhaar project encountered legal pushback and became the focus of public rhetoric. But the Supreme Court, in a landmark judgement, upheld the constitutional validity of Aadhaar and agreed that the Aadhaar Act does not violate a person’s right to privacy, paving the way for Aadhaar to scale.15
- Governance-side challenges: As Aadhaar’s work and impact traversed many ministries, it required buy-in from various ministries and had to withstand turf tussle between them.
- Cost risk: Identity card creation cost a lot in other countries. In 2020, the U.K. had to scrap their identification card scheme due to high costs, but India had to deliver identification cards on a budget of US$ 1 per person.
- Team challenges: Aadhaar was able to attract many people from the private sphere to offer their domain expertise, but managing a private-public partnership of this type was tough in the beginning.
- Time risk: The Indian government changes every five years, so the Aadhaar project needed to be at a critical mass to be able to continue even after the government changed. This meant going from zero to 600 million IDs in four years. Such speed and scale of operations, had never been attempted before.
- Adoption challenge: With a population of more than one billion, the minimum scale for the pilot to be considered a success was 100 million users. Since Aadhaar was voluntary, it was a challenge to create demand for it, given that there was no apparent value for the user at that stage.
What is Next for Aadhaar
India is taking a decentralised building-blocks approach to societal infrastructure. Aadhaar will continue as a foundational identification building-block and do that well. We envision that more and more building blocks will be added on to Aadhaar to bring more value to the citizens of India.
With the trinity of Jan Dhan (access to financial services), Aadhaar, and Mobile (connectivity), we foresee big strides in financial inclusion, access to better education, better healthcare, better livelihood opportunities, and other areas within the boundaries set by the Supreme Court ruling.
Aadhaar will try to reach citizens who are not recipients of any services yet in more user-friendly ways (such as Aadhaar enrollment at birth), and also make updating easy via the self-service, Indian postal services, etc.
The system in India is the most sophisticated that I’ve seen. It’s the basis for all kinds of connections that involve things like financial transactions. It could be good for the world if this became widely adopted.
Paul Romer
Former chief economist, World Bank
Endnotes
1. https://dashboard.cowin.gov.in/
2. home.kpmg/xx/en/home/insights/2020/04/india-government-and-institution-measures-in-response-to-covid.html
3. https://www.statista.com/statistics/1112553/government-aid-beneficiaries-for-coronavirus-india/
4. https://dl.acm.org/doi/abs/10.1145/3355625
5. https://www.macrotrends.net/countries/IND/india/population
6. https://economictimes.indiatimes.com/nilekani-to-head-unique-database-authority-gets-cabinet-rank/articleshow/4702838cms?from=mdr
7. UIDAI enrollment: https://uidai.gov.in/aadhaar_dashboard/, Population estimate(2020) : https://population.un.org/wpp/DataQuery/
8. https://www.thehindubusinessline.com/money-and-banking/use-of-aadhaar-for-kyc-authentication-will-cut-costs/article8490492.ece, https://uidai.gov.in/images/resource/Circular_for_Pricing_of_Aadhaar_Authetication_Transactions_24042019.pdf
9. https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/digital-identification-a-key-to-inclusive-growth
10. https://www.worldbank.org/en/publication/wdr2016, https://www.arunjaitley.com/benefits-of-the-aadhaar-where-it-stands-today/
11. https://uidai.gov.in/images/rajyasabha/Au2500.pdf
12. https://stateofaadhaar.in/assets/download/SoA_2019_Report_web.pdf
13. https://uidai.gov.in/aadhaar_dashboard/auth_trend.php, https://uidai.gov.in//images/rajyasabha/RSPQ400(Unstarred).pdf
14. https://www.financialexpress.com/industry/banking-finance/lockdown-effect-micro-atm-transactions-double-to-1-13-crore-per-day/1948102/
15. https://scobserver-production.s3.amazonaws.com/uploads/case_document/document_upload/456/Aadhaar_35071_2012_FullJudgement.pdf
