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Aadhaar program wins World Bank praise


Paul Romer, Chief Economist at the World Bank, told Bloomberg that India’s Aadhaar scheme is tremendously effective and should be emulated around the world.

According to a report by Bloomberg, Romer said: “The system in India is the most sophisticated that I’ve seen. It is 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.”

While other countries are also looking at similar programs, research argues that it is best to develop one standardized system so people can carry their IDs wherever they go, noted Romer.

Countries reportedly examining the deployment of similar identification schemes include: Afghanistan, Bangladesh, Russia, Morocco, Algeria, Tunisia and Tanzania.

Aadhaar is the 12-digit unique identification number issued by the Indian government to every individual resident of India. The Aadhaar project aims to provide a single, unique identifier which captures all the demographic and biometric details of every Indian resident. Currently, over 1.1 billion citizens have biometric IDs across India under the scheme. This translates to approximately 99 percent of adults in India having an Aadhaar ID that can link to over 80 government social programs.

The continued extension of Aadhaar to manage social services saves the Indian government about US$2 billion a year, and could rise to US$7 billion in savings by March 2018, or 0.35 percent of the country’s gross domestic product, according to CLSA, an Asian based investment brokerage and analysis firm. For this reason, the national government is considering extending the Aadhaar scheme to manage India’s food distribution system, which is the world’s largest welfare program.

Although the Aadhaar system was initially launched for the provision of social services, the Indian government’s next intention is to extend Aadhaar to the majority of consumer financial transactions. Currently there are 400 million bank accounts linked to Aadhaar.

The government is also experimenting with numerous methods to extend electronic payment and financial services, in order to increase access to banking for the rural poor, and also to reduce dependence upon the paper money supply, which the current Indian government claims is responsible for high levels of tax evasion and fraud.

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