Challenges of Aadhar-An overview


  • The Centre has instructed the States not to deny Public Distribution System benefits to any person who does not have Aadhaar or has not linked the ration card to the 12-digit biometric identifier
  • It also asked the States not to delete eligible households from the list of beneficiaries for non-possession of Aadhaar.

Ministry’s decision:

  • The Ministry’s directive mentions that until Aadhaar is assigned to the beneficiary, subsidised foodgrains will have to be given on production of ration card, enrolment slip and other stipulated documents.
  • Irrespective of whether all members of an eligible household have Aadhaar, full quantity of subsidised foodgrains or transfer of food subsidy on complaince with the requirements will have to be extended.
  • Even in the case of failure of biometric authentication due to a glitch or poor biometric quality, the beneficiary will have to be given the benefits on production of Aadhaar card along with the ration card.

What is Aadhaar?

  • The Aadhaar is the name of the Unique Identification Number that the Unique Identification Authority of India (UIDAI) issues to every resident of India.
  • It is a twelve digit number which is linked the resident’s demographic and biometric information.
  • The data is collected by the Unique Identification Authority of India (UIDAI), a statutory authority established in January 2009 by the Government of India, under the Ministry of Electronics and Information Technology, under the provisions of the Aadhaar (Targeted Delivery of Financial and other Subsidies, benefits and services) Act, 2016.

What is the need of Aadhaar?

  • The Aadhaar Project is an attempt to aid in real time verification.
  • The objective of the scheme is to issue a unique identification number which can be authenticated and verified online.
  • A large part of the Indian population had no IDs or relied on IDs like ration cards and Voter Cards.
  • This necessitated the need for a single digital ID which could be verified anytime, anywhere in India.
  • The Aadhaar would also facilitate the access to host of governmental benefits and services.
  • For the effective enforcement of individual rights it became necessary to have a unique identification number.
  • A clear registration and recognition of the individual identity with the state is necessary to implement their rights, to employment, education, food etc.
  • Aadhaar project has been linked to some public subsidy and unemployment benefit schemes like the domestic LPG scheme and MGNREGS. In these Direct Benefit Transfer schemes, the subsidy money is directly transferred to a bank account which is Aadhaar-linked.
  • On 29 July 2011, the Ministry of Petroleum and Natural Gas signed a memorandum of understanding with UIDAI. The Ministry had hoped the ID system would help them eliminate loss of the subsidised kerosene and LPG. In May 2012, the government announced that it will begin issuing Aadhaar-linked MGNREGS cards On 26 November 2012, a pilot project was launched in 51 district

What is UIDAI?

  • The Unique Identification Authority of India was established in 2009 and functions as part of the Planning Commission of India.
  • UIDAI is a government agency that has been mandated by the government to develop, identify and set up the necessary infrastructure for issuing Aadhaar cards and
  • (a) robust enough to eliminate duplicate and fake identities, and
  • (b) can be verified and authenticated in an easy, cost-effective way.
  • The agency issues cards with the help of several registrar agencies composed of state-owned entities and departments as well as public sector banks and entities such as the Life Insurance Corporation of India.

What is JAM?

  • JAM (short for Jan Dhan-Aadhaar-Mobile) trinity refers to the government of India initiative to link Jan Dhan accounts, Mobile numbers and Aadhar cards of Indians to plug the leakages of government subsidies.


  • 1) The three modes of identification would help deliver direct benefits to India’s poor.
  • The Aadhaar would help in direct biometric identification of disadvantaged citizens.
  • Jan Dhan Bank accounts and mobile phones will help direct transfer of funds into their accounts.
  • 2) The scheme would bring all Indians into the mainstream and would end the social as well as economic exclusion.
  • 3) The government can transfer resources to citizens faster and more reliably and with less leakage.
  • 4) It will help government to identify various beneficiaries of various schemes.
  • 5) It will be generate huge infrastructure available at lower cost.

What are the challenges for implementation of JAM?

  • Economic Survey divides JAM issues  into three components-
  • 1) Identification or First-Mile:  Identification of beneficiaries by government
  • 2) Transfer or Middle-Mile: Transfer of fund to beneficiaries by government
  • 3) Access or Last-Mile: Access of fund by beneficiaries

The challenges of these components are as follows:

  • First-mile has issues of ghost and duplicate names due to administrative and political discretion and use of pre-Aadhaar database.  beneficiary eligibility and identification as a first mile challenge has been acknowledged.It points to the need for beneficiary databases and the fact that the “accuracy and legitimacy of beneficiary databases have been hampered by the administrative and political discretion involved in grating identity proofs”. Indeed, the reason why the rollout of the National Food Security Act was extremely delayed was the fact that many state governments were reluctant to clean up and digitise their beneficiary databases.
  • The middle-mile challenge relates to coordination within the government – the lesser number of departments involved in administering a particular subsidy, the easier it is to roll out DBT. In the case of domestic fuel, for example, DBT was easier in the case of LPG because only the union petroleum ministry and the oil marketing companies (and their distributor. Main issue in this layer is of within-government coordination and dealing with supply chain interest groups.
  • Last-mile layer faces issues of lesser Bank penetration, mostly in rural areas.The last-mile challenge is a significant one, which both supporters and critics of DBT have often flagged – the problem of banking infrastructure in rural areas and the failure of the banking correspondent model to take off. The Survey admits that “despite Jan Dhan Yojana’s record breaking feats, basic savings account penetration in most states is still relatively low” (46 per cent on average) and that mobile payments has not quite taken off in the rural areas. It also deals with issues of exclusion of genuine beneficiaries.

Other challenges are as follows:

  • The process of putting new infrastructure in place can be extremely disruptive, as lack of education will make it difficult to understand new procedures.
  • Aadhar accounts are not sufficiently opened as certain issues like privacy are affecting its credibility
  • Some concerns about the effectiveness of Direct Benefit Transfer (DBT) to all schemes.
  • For example: farmers are criticising they it would be difficult to pay high upfront costs for fertiliser and then wait for payments through banks.

What are the measures to be taken?

  • Economic Survey argues that policymakers should decide where to apply JAM based on two considerations of:
  • Amount of leakages: If amount of the leakages in a given scheme/area is huge then it can be next target for introduction of JAM as subsidies with higher leakages will have larger returns from introducing JAM.
  • Control of the central government: Control of central government will reduce administrative challenges of co-ordination and political challenges of opposition by interest groups.
  • Finance ministry should provide adequate and timely disbursement of transaction processing charges for the bank and agent network.
  • There should be an increase in penetration of banks and financial institutions in rural areas.
  • Strict monitoring of subsidy routes is to be maintained. Any suspicious activity should be thoroughly investigated by vigilance agencies
  • Banking Corresponding agents can be used to educate farmers not to fall into traps of moneylenders.
  • There is need for infrastructure like cellular towers, cheap mobile plans because without mobile connectivity JAM would be meaningless.
  • Government should see to it that various schemes like Smart City, Skill India, Digital India, Make In India are integrated with JAM and DBT so that less leakage and more productive results are achieved faster.

What are the schemes linked to Aadhaar?

  • Proof of identity: Aadhaar is accepted as a valid identity proof by the Central and all State governments for availing services, including application for passport, opening of bank or insurance accounts, getting telephone and mobile phone connections, and buying rail tickets and availing concessions.
  • Verifications of electoral rolls: In order to keep a check on multiple entries in electoral rolls, the Election Commission has started a drive to include Aadhaar number along with Electors Photo Identity Card or voter ID card.
  • Bank Accounts and transactions: The Centre made quoting of Aadhaar mandatory for opening of bank accounts as well as for any financial transaction of 50,000 and above.
  • Provident fund: The Employees Provident Fund Organisation allots a Universal Account Number in order to facilitate smooth transfer of funds when an employee switches companies.
  • By linking his/her Aadhaar to this UAN, the employee can transfer the PF amount directly to the saving account.
  • Filing I-T returns: The government has made it mandatory to link Aadhaar with PAN to eliminate multiple PAN used by individuals.

What is Public Distribution System?

  • Public distribution system (PDS), launched in June 1947, is an Indian food security system.
  • Established by the Government of India under Ministry of Consumer Affairs, Food, and Public Distribution and are managed jointly by state governments in India.
  • Public distribution system is a government-sponsored chain of shops entrusted with the work of distributing basic food and non-food commodities to the needy sections of the society at very cheap prices.
  • Wheat, rice, kerosene, sugar, etc. are a few major commodities distributed by the public distribution system.

Problems of Public Distribution System:

  • Corruption: The PDS which was introduced to protect the food security of poor is highly corrupted.
  • The collusion between officials and sellers create a way to distribute poor quality of entitlements or less than the actual amount to beneficiaries.
  • Substandard quality: Public distribution system in country suffers from irregular and poor quality of entitlements that distributed through fair price shops.
  • Adulteration, quality and underweight is a major problem faced by the beneficiaries.
  • Fake ration cards: The presence of fake ration cards are the cards that are issued for fictitious family and genuine ration cards are used by someone else.
  • The actual entitlements that are meant for poor households are thus deprived.
  •  Wrong classification of economic status: Households are wrongly classified into incorrect class i.e. above poverty line (APL), below poverty line (BPL) and Anthyodaya Anna Yojana (AAY) to distribute the PDS entitlements.

What is the Aadhaar Act, 2016?

  • The Aadhaar (Targeted Delivery of Financial and other Subsidies, benefits and services) Act, 2016 is a money bill of the Parliament of India.
  • It was passed on the 11 March 2016 by the Lok Sabha.
  • It aims to provide legal backing to the Aadhaar unique identification number project.


  • Aadhaar Act seeks to provide efficient, transparent and targeted delivery of subsidies, benefits and services to individuals residing in India by assigning them unique identity numbers (UID) or Aadhaar number.
  • It will be used for all benefit that will be linked to consolidated fund of India or the expenditure incurred from it.
  • Both central and state government can use Aadhaar for disbursal for benefits and subsidies.

What is the debate between Aadhaar and Right to Privacy?

  • Aadhaar is a product of what started as an idea of biometric identity cards for the Border States in India in the wake of the increased terrorist activity.
  • But now the government is trying to implement the new UID scheme by masking it as a developmental agenda.
  • Deeper questions of surveillance by the state, invasion of privacy at all levels, and the very fact of human beings being depicted to be mere numbers in the eyes of state leading to violation of dignity arise as a result of the UID project.
  • Every decision made by a human in India could be under state surveillance.
  • This could potentially lead to the denial of, and access to, many important social opportunities and other facilities for a particular section of people, who could be discriminated against by the state, using the information gathered from the UID.

What are the issues with Aadhaar?

  1. Questionable Legal Backing: The current legal backing of Aadhar is via a money bill. The Aadhaar (Targeted Delivery of Financial and other Subsidies, benefits and services) Act, 2016 came into force in 2016, but this is now challenged in Supreme Court.
  2. Issues with sharing information collected under Aadhaar – The provisions in the Aadhaar (Targeted Delivery of Financial and other Subsidies, benefits and services) Act, 2016 Act with regard to the protection of identity information and authentication records may be affected by recent verdict by Supreme Court that Right to Privacy is a Fundamental Right.
  3. Violation of rights – It was argued that the UIDAI might share the biometric information of people with other government agencies and thus would violate people’s right to privacy. They also thought that using the biometric data, people might be singled out, tracked, harassed and have their rights violated. A five-judge bench of the apex court will test the validity of Aadhaar from the aspect of privacy as a Fundamental Right soon.
  4. Has potential to profile individuals – The Act does not specifically prohibit law enforcement and intelligence agencies from using the Aadhaar number as a link (key) across various datasets (such as telephone records, air travel records, etc.) in order to recognise patterns of behaviour. Techniques such as various computer programmes across data sets for pattern recognition can be used for detecting potential illegal activities. However, there may be chances that innocent individuals can be identified incorrectly.
  5. Discretionary powers of UIDAI – The Act empowers the UID authority to specify demographic information that may be collected. The only restriction imposed on the authority is that it shall not record information pertaining to race, religion, caste, language, records of entitlements, income or health of the individual. This power will allow the authority to collect additional personal information, without prior approval from Parliament. Furthermore, UID has exclusive power to make complaints and the courts cannot take cognizance of any offence punishable under the Aadhaar Act unless a complaint is made by the UID authority.
  6. The time period for maintaining authentication records – The bill does not specify the maximum duration for which authentication records may be stored by the UID authority. Instead, it allows the UID authority to specify this through regulations. Maintaining authentication records over a long time period may be misused for activities such as profiling an individual’s behaviour


  • Even though Aadhaar passes through a series of controversies, it is in the hands of the common mass and the government to make it successful.
  • The success of Aadhaar implies a country free from terrorism and poverty.
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