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Claims of savings from Aadhaar are an exercise in puffery

"One must accept a continuing divergence between approved and conditioned belief and the reality. In the end, it is the reality that counts." - John Kenneth Galbraith in "The Economics of Innocent Fraud"

"If you think IT is the solution to your problem, then you don't understand IT, and you don't understand your problem either." - Roger Needham, a noted British computer scientist

At the recent Global Conference on Cyber Space, Prime Minister Modi said, "I am sure most of you are already aware of Aadhaar, which is the unique biometric identity of a person. Through better targeting of subsidies, the JAM trinity has prevented leakages to the tune of nearly 10 billion dollars so far." Sometime back former head of Unique Identification Authority of India (UIDAI), Nandan Nilekani had claimed in Washington that so far government has saved about $9 billion by eliminating fraud in beneficiary lists due to 12-digit biometric Unique Identification (UID)/Aadhaar Numbers being fed into Central Identities Data Repository (CIDR).

These questionable claims about savings from UID/Aadhaar have been widely reported. If they can be believed so far government has made huge savings by Aadhaar Numbers. Such claims have been disseminated without asking them to provide the breakup of the claimed savings. Most publications published this sort of claims without verifying the source of the data. Such routine claims are part of the job of salesman but it is the duty of journalists to ascertain truth before serving it as gospel of truth.

Given the fact that these claims are apparently based on reports of World Bank it is relevant to recall the veracity of Bank's own claims. A World Bank report of 2016 claimed that UID/Aadhaar can save Rs 70, 000 crores annually once UID/Aadhaar if it is applied to all the social programs and welfare systems India. This has been submitted as part of the Central government's reply to a writ petition before the Supreme Court.

The affidavit of 27 April, 2017 by the government enclosed the relevant portions of a 359 page long World Bank reportof 2016 on digital dividends (at page 195) to underline the imminent savings through reduce(d) leakage and efficiency gains. This data of 11 billion refers to page 197 of the Bank's report that is based on a 4- page long 2015 study titled From Cash to Digital Transfers in India: The Story So Far by one Shweta S. Banerjee. Shweta works on the Microfinance Gateway which is housed at the Consultative Group to Assist the Poor (CGAP).

At page no. 1 of this study it is stated The value of these transfers is estimated to be Rs 70,000 crores ($11.3 billion) per annum. It is quite manifest from the Bank's report itself that it is making a claim about the total value of the money that has been transferred and not about savings as a result of adopting a direct cash transfer model. The source of data which she has cited in this study has conclusively been established to be questionable and unreliable and a major goof up.

Such claims have been debunked by Comptroller and Auditor General of India (CAG)as well. If Bank's own data has been found to be 'puffery', how can its volunteer's claims inspire any trust? Now that Bank has admitted its own Himalayan blunder in writing ,it is high time it came out with a clarification to ensure that misleading claims about such savings can be buried ten fathom deep, with no chance of resurrection.

All the ministers, agencies and publications which are reproducing the Bank's Himalayan blunder of equating value of transfers with savings in subsidy in its 2016 study are indeed either guilty or are complicit in this not so innocent fraud.

As to claims about savings from UID/Aadhaar project, insincerity has been evident from the very outset. During the tenure of Niekani at UIDAI, Yashwant Sinha headed Parliamentary Standing Committee on Finance in its Sixty-Ninth Report on the ˜Demands for Grants (2013-14)" observed, "A provision of Rs. 2,620 crore has been allocated in Budget Estimate (2013-14) for UIDAI and a major part of the budget provision for Rs. 1,040 crore is earmarked for ˜Enrolment Authentication and Updation", out of which an amount of Rs. 1,000 crore has been earmarked under the head ˜other charges"."

The total budgetary allocations made for UIDAI since its inception upto 31 March 2014 was Rs 5440.30 crores. For the year 2009-10, it was Rs 120 crores. For 2010-11, it was Rs 1,900 crores. For 2011-12, it was Rs 1,470 crores 1,200. For 2012-13, it was 1,758 crores and for 2013-14, it was Rs 2,620.00 crores. For the year 2014-15, the budget estimate was Rs 2,039. The budget estimate of expenditure on the project being implemented by UIDAI was Rs 2,000 crore in 20015-16. For the year 2016-17, the budget estimate was Rs 990 crores (that included 190 crore first supplementary). As of February 2017, UIDAI has incurred a total cumulative expenditure of Rs 8,536.83 crores. This includes undefined “other charges” pointed out by the Parliamentary Committee.

Shouldn't UIDAI provide the details of the expenses incurred under "other charges"?

Take the case of the year 2009-10 when the budget estimate was Rs 120 crores. The final expenditure was Rs 26.21 crores. In the year 2015-16 the budget estimate was Rs 2,000 crores but the final expenditure was Rs 1679 crores. In 2016-17, when budget estimate (BE) was Rs 990 crores, the final expenditure is Rs 877.16 crore up to February 2017. These are details of expenditures so far. Besides this the Parliamentary Committee wondered in its report as to why inflated targets were consistently being given. It is apparent that there is more to it than meets the eye.

The total estimated budget of the biometric UID/Aadhaar number project has not been disclosed till date despite repeated demand for it while seeking cost: benefit analysis. In any case unless total estimated budget of the project is revealed all claims of benefits are suspect and untrustworthy. How can one know about total savings unless the total cost is disclosed?


Related Info.

Issues: Right to Privacy, Aadhar, Data Protection
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Related Bulletin : Jan 2018