Aadhaar often results in ‘service denials’, its reliability is questionable, says Moody’s

Global credit rating agency Moody’s Investors Service has said that the usage of Aadhaar to implement welfare measures frequently leads to denial of service.

Aadhaar is a unique 12-digit identity number tied to an individual’s fingerprints, face and eye scan. The unique identification project was introduced as a voluntary way of improving welfare service delivery and giving those without identification an ID they could use.

In practice, however, the government expanded it by making it mandatory for a number of services, forcing residents to sign up for Aadhaar to get access to a number of welfare measures.

In a report released on September 21, Moody’s said that the Aadhaar system often leads to “service denials” and that the “reliability of biometric technologies, especially for manual laborers in hot, humid climates, is questionable”.

In January, the Centre said that an Aadhaar-based payment system would be made mandatory for paying wages to workers under the Mahatma Gandhi National Rural Employment Guarantee Act. Previously, the workers had the option to choose a bank account-based payment.

However, on August 30, the government extended the deadline to make the payment system mandatory till December 31, or until further orders.

In its report last week, the ratings agency cautioned that a single entity controlling users’ ID credentials can dispose of data for internal or third-party profiling purposes. Such systems, it added, offer the least personal data control to users and heighten risk of data breaches.

Security researchers and journalists have also reported multiple vulnerabilities and data leaks tied to the Aadhaar programme, though officials have downplayed the reports and said the data was safe from hacking.

“In recent years, the spotlight has shifted toward DID [decentralised identity] as a strategic response to the security and privacy vulnerabilities posed by centralised ID systems like Aadhaar,” the Moody’s report said.

The rating agency cited successful programs in Catalonia, Azerbaijan and Estonia, which have issued digital identities through a blockchain-based system.

“Estonia, known for its fully digitalised public services, has embraced SSI [Self-Sovereign Identity] to grant citizens complete control over their digital identities,” the report noted.

Scroll’s Identity Project focuses on the many issues connected to Aadhaar. Read the entire series here.