Is Aadhaar's Mandatory Expansion Impacting Services and Policy?

Sectoral News: Moody's report flags data control & privacy concerns within centralized ID systems like Aadhaar. It emphasizes the potential for data exposure & profiling by a single controlling entity.

The Processor
25 Sep 2023 Updated On 26 Sep 2023

In a recent analysis, global credit rating agency Moody's Investors Service has spotlighted India's Aadhaar system and raised significant concerns regarding its implementation for welfare measures. The report not only highlights challenges but also suggests alternative solutions to address the issues at hand.

Biometric Reliability Challenges 

Originally conceived as a voluntary 12-digit identity project aimed at streamlining welfare service delivery, Aadhaar has seen a significant shift towards becoming mandatory for accessing various government services. Moody's report underscores this transformation, emphasizing how it has led to recurrent "service denials" for citizens.

One of the core concerns highlighted by Moody's pertains to the reliability of biometric technologies in certain challenging environments, particularly hot and humid climates. This raises questions about the effectiveness of Aadhaar's biometric verification methods, which form a crucial part of the system.

Mandatory Aadhaar-Based Payment System 

The government's decision to mandate Aadhaar-based payment methods, previously optional under the Mahatma Gandhi National Rural Employment Guarantee Act, has been a contentious issue. Initially slated for implementation in January, the government extended the deadline to December, sparking discussions on its feasibility and implications.

Moody's report flags concerns related to data control and privacy within centralized ID systems like Aadhaar. It emphasizes the potential for data exposure and profiling by a single controlling entity, which could increase the vulnerability to data breaches.

Exploring Alternatives: Self-Sovereign Identity (SSI) 

The analysis proposes a potential solution to the challenges posed by Aadhaar in the form of Self-Sovereign Identity (SSI). SSI systems offer a decentralized approach to identity management, providing individuals with greater control over their data. The report cites successful SSI programs in Catalonia, Azerbaijan, and Estonia as promising examples.

Estonia, renowned for its fully digitalized public services, is a prime illustration of the SSI concept. Estonian citizens enjoy complete control over their digital identities, reflecting the advantages of a more secure and privacy-centric alternative to centralized systems like Aadhaar.