Good communication is vital but not enough to hyper-propel enrolment for a number on a card that not everyone thinks they want or need. Physics tells us that momentum is mass multiplied by velocity. This holds just as true in the political economy, where velocity is determined by the extent of necessary and sufficient conditions.
The critical catalyst required for acceleration was utility, and the seeding of the idea of unique identity and Aadhaar into the heart of the discourse on public expenditure and delivery of public services. To this end, the objective was to create branding and brand recall in the public domain and in conversations. This was crafted through the corridors of policy at every level of government and at multiple forums: from mentions in the annual budget to the economic survey, in elaboration of the premise of Aadhaar and its promise through documentations that outlined benefits, within departments and at inter-ministerial committees.
The promise of unique identity was first outlined in the Economic Survey of 2009–10. “The UID System is envisioned as a means for residents to easily establish their identity, anywhere in the country. It will be an important step towards ensuring that residents in India can access the resources and benefits they are entitled to.”
It was underlined in the president’s address to Parliament. Pratibha Patil, then the president, said, “To reach the millions of underprivileged people, my Government has launched a unique Aadhaar scheme which would help improve service delivery, accountability and transparency in social sector programmes and lead to their financial inclusion.”
The 13th Finance Commission, chaired by Vijay Kelkar, said, “We propose to incentivise issue of UIDs to those people below the poverty line who are beneficiaries of public welfare schemes.” The Commission decided to pay Rs 100 per person and created a grant of Rs 29.89 billion for state governments.
Prime Minister Manmohan Singh too projected its potential.
At the 55th National Development Council Meeting, he presented the unique identity programme as an instrument to reduce fiscal deficit and deliver succour to the poor. “The operationalisation of the Unique Identification Number Scheme, together with developments in information technology, provides an opportunity to target subsidies effectively to those who really need them and deserve them.” At an interaction with newspaper editors, he said, “We need system reforms. If the UIDAI can give unique ID numbers to all our residents we would have discovered a new pathway to eliminate the scope for corruption and leakages in distribution of subsidies.”
Finance Minister Pranab Mukherjee, chief evangelist of the idea “close to his heart”, ensured that he not only mentioned it in every budget speech but wherever he spoke about effective governance, whether within the party, at conferences of chief ministers, cabinet meetings or in Parliament. Making a suo motu statement on inflation in November 2011, he presented Aadhaar as an instrument to protect the poor from the vagaries of market forces. He said, “Government is working to improve delivery of benefits including subsidies to the vulnerable sections of the population using the UIDAI platform.”
Meanwhile, [Nandan] Nilekani and his core team were readying a library of solutions – internally referred to as sleeper cells – for as and when, and if, a problem arose. Governments live with problems like they are fixtures, only taking note when it morphs into a full-fledged crisis. When this happens, government looks for documentation of the problem and solutions. This is because no problem is really new or has not been discussed in the system. And documentation creates an opening, like in a chess game, for the next move.
Team UIDAI had played their own devil’s advocate, anticipated and forecast some issues, and brainstormed the solutions – all of this even before the first code for software for the enrolment process had been written.
They had also chronicled what more they could do, and how they would do it. The first Strategy Overview, for instance, discusses the use of Aadhaar for opening accounts, for doorstep banking via micro-ATMs. It said, “Linking the UID number to a universal, accessible, and affordable micropayments model can transform the access the poor have to banking services.”
The way forward was to map the landscape of services that needed proof of identity and proof of address and embed Aadhaar as the solution. This leverage was embedded in its 28 January 2009 notification which specifically enabled UIDAI to ‘define usage and applicability of UID for delivery of various services”. It also said that UIDAI should “define mechanisms and processes for interlinking UID with partner databases on a continuous basis”.
To catalyse this process, team UIDAI created a bank of Aadhaar-enabled solutions and put it out in the public domain. This included “Envisioning a Role for Aadhaar in the Public Distribution System”, “Discussion Paper on Aadhaar-based Financial Inclusion”, “UID and Education”, “UID and NREGA”, “UID and Public Health” and “Leveraging Aadhaar in the Telecom Sector”. Flanking, or building around the central idea of identification with reports, was aimed at promoting early adoption, expansion and immortality.
The first stop of this strategy was banking. Throughout UPA I and II, the Manmohan Singh government was very keen on improving financial inclusion. Nearly two-thirds of Indians did not have bank accounts, or as the government and bankers say, were “unbanked”. The problem had two facets: access to banking and access to banks. Access to banking was haunted by poor processes – a primary cause being lack of documents for identification. Access to banks was essentially hampered by the fact there were not enough bank branches. India had a total of 83,997 branches. Rural India with over 600,000 villages was served by just 32,289 branches.
Team UIDAI’s approach was two-pronged. First, get Aadhaar approved as a valid KYC document by banks, so those who had access to banks could open accounts. Second, present hand-held micro ATMs and other Aadhaar-enabled processes as solutions that would enable the creation of an ecosystem for banking to be possible. Towards this, UIDAI continuously looked at opportunities to be part of any problem-solving platforms or committees and embedded itself in government committees on financial inclusion.
On 11 December 2009, the Reserve Bank of India held a meeting with the Indian Banks Association, the Institute for Development and Research on Banking Technology, India Post, NABARD and a number of banks on Aadhaar-based financial inclusion. Two working groups were formed to address technology and connectivity issues. UIDAI mobilised opinion for the adoption of Aadhaar as KYC with the banks. There was initial resistance from RBI. The Ministry of Finance pushed for acceptance, and by December 2010, a few weeks after the Tembhali launch, Aadhaar was cleared as valid KYC for opening bank accounts.
There was an element of serendipity too – a series of events coalesced to deliver the perfect conditions for quantum change.
The need for modernising payment systems in banks was first highlighted in a 2001 Vision Document of RBI. In 2005, the RBI revisited the idea and put out Vision Document II after studying payment systems in the US, UK, Europe, Japan, Singapore and China. Its stated mission was “the establishment of safe, secure, sound and efficient payment and settlement systems for the country”. In 2008, post legislation and guidelines, an entity to do this was finally cleared.
In December that year, the government created the National Payments Corporation of India (NPCI), with ten big banks as promoters, to integrate retail payment systems and create the infrastructure for an affordable payment mechanism. The UIDAI team seized the opportunity and began discussions with RBI, NPCI and the banks. NPCI was the perfect platform to set up applications for expanding inclusion through electronic transfer of funds, scholarships, subsidies, micro ATMs and so on.
The second serendipitous event was the massive expansion of mobile phone subscription across India. In 2010, India’s population was 1,210 million. Of these, less than a fourth had a bank account. Although the official score was over 600 million accounts, unique individual bank accounts were estimated to be around 250 million. On 31 July 2010, fifteen years after the first cellular mobile phone call was made by Telecom Minister Sukh Ram in Delhi to West Bengal Chief Minister Jyoti Basu, India had 635.5 million mobile phone subscribers.
The scale of mobile telephony penetration provided a huge opportunity for NPCI to create payment systems and for UIDAI to plan applications. Technology and innovative policies could combine to give Indians the options to bank whenever, wherever, however with the help of devices and applications.
In November 2009, the government set up an Inter-Ministerial Group on Provision of Basic Financial Services through Mobile Phones with a subgroup of NPCI, UIDAI and the Department of Technology. In April 2010, the government approved a framework for providing financial services through mobile phones – through a mobile-based PIN system using “Mobile Banking POS” and through a fingerprint-based system using Aadhaar numbers.
Excerpted with permission from Aadhaar: A Biometric History of India’s 12-digit Revolution, Shankkar Aiyar, Westland.