Lessons from Aadhaar for digital ID architecture, financing shared by Nilekani and ID4Africa
Nandan Nilekani, founding chairman of the Unique Identification Authority of India, and prominent Aadhaar architect, expounded on the lessons that can be drawn from the world’s largest digital ID system in ID4Africa’s latest Livecast.
His work on digital identity, payments and data empowerment has helped them become key pillars in India’s digital public infrastructure, says ID4Africa Executive Chairman Dr. Joseph Atick.
The context Aadhaar was created in, starting in around 2006, was characterized by a government commitment to increase social welfare spending, and an increasingly mobile population, according to Nilekani. Both increased the need for people to be able to prove their identity. In the latter case, people moving from a village to a city may be refused work or service access if unable to prove their eligibility, for example.
The UIDAI was created in 2009 to address this need, and now 99.9 percent of Indians have a digital identity, and use it at least once a month, according to government records.
As an “API-led, foundational ID,” Aadhaar was designed to have services built on top of it. It is now used 80 million times a day for authentication, and “several million times a day” for KYC, says Nilekani. The interoperable architecture is the reason for the scale of usage, he argues.
Asked by Atick if he had doubts about adoption in the early days of the project, Nilekani notes that a lot of research was done, which showed that those Indians most vulnerable and in need of ID “saw this as an asset, an economic asset with which they would improve their lives.”
Direct benefit transfers were quickly established, along with the Aadhaar payment bridge for direct transfers between individuals, making the economic benefit real for many. Biometric withdrawals with the Aadhaar-Enabled Payment System (AEPS) completes the set, and was critical to distributing emergency funds during the early days of the Covid pandemic.
Much of the world misunderstood the purpose of Aadhaar at first, Atick says, believing its primary motivation was to reduce leakage from social spending.
The actual inspiration, Nilekani says, was a pair of platforms built by the U.S. government that eventually became broadly beneficial; the internet and GPS. Reducing leakages was also important from the beginning, he notes. Nilekani estimates about $25 billion in savings from fraud reduction since the program began. The system was built for around $2 billion, so “these systems pay for themselves.”
The discussion turned to the reasons for collecting the minimum information necessary for uniquely identifying and deduplicating individuals. Atick pointed out this decision has been a struggle in many African countries, where registration with 75 or 80 data points have proved problematic.
Nilekani notes that his popularity within the government took something of a hit as he rejected blood type, income and other information as part of the Aadhaar registry.
He cautions against making simple causal claims about how much GDP growth has benefited from Aadhaar, but argues that more important is the increased protection of India’s vulnerable. Aadhaar and the India Stack’s contributions to GDP are significant, he says, but secondary.
Based on a study by BIS on the relationship between GDP and how many people possess bank accounts, Nilekani says India reached a level of financial inclusion through Aadhaar that would have taken about 46 years without it in only 8 or 9 years.
Answering the critics
Having reached 1.3 billion people and 99 percent of the population, “it is difficult to argue that Aadhaar is an instrument of exclusion,” Nilekani says.
Privacy criticisms were addressed in the second-longest running Supreme Court case in India’s history, he says, with a ruling that found it meets the necessary privacy threshold.
Measures were in place from the beginning for those without permanent addresses, exact birth dates or functioning biometrics (such as those with no fingerprints).
Biometrics are stored offline, and cannot be downloaded or used outside of the system, Nilekani says.
In discussing the current state of privacy law in India, he says that the new, shorter data privacy legislation is expected to pass soon, after feedback on a previous version led to its withdrawal and redrafting.
The centralized system protects against surveillance by collecting no information about how it used. Tokenization and offline verification also help to minimize the risk of surveillance, according to Nilekani.
The various uses of Aadhaar and how they work were discussed, along with advice for countries setting up identity systems, and how to finance foundational ID.
The relationship between Aadhaar and India’s Unified Payment Interface was described by Nilekani, and how data empowerment is being built into the system. The latter is based on a separation of the consent management and data storage functions, and Atick and Nilekani agreed can be applied globally to improve consumers control over their data.
Segments focussing on the status of digital identity in Malawi and in humanitarian efforts followed. These will be covered on Biometric Update in the days ahead.