Why have the Government and Nandan Nilekani’s UIDAI shied away from a proper cost-benefit analysis of the Aadhaar project? Why is a powerful lobby hard at work to obfuscate inconvenient facts? After all, public money is at stake. ~ Usha Ramanathan
There was no feasibility study and no cost-benefit analysis that preceded the launch of the UID project.
In August 2010, a year and a half after the project was set up, there was a question in the Lok Sabha: "whether any pre-feasibility study or cost benefit analysis was done before the notification for creation of UIDAI was issued on 28-01-2009; if so, the details thereof." Mr Narayanaswamy, in his capacity as Minister of Planning, responded, on 18 August 2010: "An Empowered Group of Ministers which was constituted in December 2006 …. decided that a Unique Identification Authority of India be constituted under the Planning Commission and be made responsible for implementing the project which would aim at better targeting of welfare services, improving efficiency of the services and better governance.
The benefits accruing out of the project should far outweigh the cost of the project."
That was it.
In September 2010, a "statement of concern" signed by Justice VR Krishna Iyer, Romila Thapar, Justice AP Shah, SR Sankaran, Aruna Roy and 12 others expressed reservations about the project proceeding without either a feasibility study or a cost-benefit analysis. "Before it (the project) goes any further," they said, "we consider it imperative that the following be done – Do a feasibility study:
There are claims made in relation to the project, about what it can do for PDS and NREGA, for instance, which does not reflect any understanding of the situation on the ground. The project documents do not say what other effects the project may have, including its potential to be intrusive and violative of privacy, who may handle the data (there will be multiple persons involved in entering, maintaining and using the data), who may be able to have access to the data and similar other questions." And: "Do a cost-benefit analysis:…"
In an interview in April 2010, Mr Nandan Nilekani was saying: "I think the savings will be fairly substantial. I can’t put a number around it but it will be substantial." In later interviews, when the challenge to the project was more audible, he was saying: "Now every year India spends 3000 crores on entitlements and subsidies (which) will keep going up in future. And if you can bring in using aadhaar numbers, you make sure that you eliminate ghosts and duplicate numbers among beneficiaries."
These were aspirational and hypothetical. No formal figure emerged from any deliberations. Perceptions of inefficiencies in governmental functioning, leakages in service delivery, and endemic corruption offered a credible basis for assertions that the UID would clean up the system; but these were untested and unqualified assertions. As for surveillance, Mr Nilekani would only say, "no comment".
When the Standing Committee on Finance, in its report rejecting the National Identification Authority of India Bill, commented adversely on there not having been a cost-benefit analysis of the project, that became difficult to ignore.
It was November 2012 when a paper emerged from the National Institute of Public Finance and Policy on "A cost-benefit analysis of aadhaar". The paper did an "estimate of benefits" in PDS, NREGA, education, fertiliser subsidy, LPG subsidy, Indira Awas Yojana, scholarships, pensions and Janani Suraksha Yojana, ASHA and ICDS. The paper, which was characterised as a `study’, was then `presented’ to the Deputy Chairperson of the Planning Commission. It was hosted on the Planning Commission website. It was widely reported, as the PIB release said, that "after taking into account all the costs, and making modest assumptions about leakages, the study finds that the aadhaar project would yield an internal rate of return of 52.85 percent to the government." A remarkable figure, that. Except…
In February 2013, Reetika Khera, an economist who works on the PDS and NREGA and who has been challenging the claims of the UIDAI on what its project will achieve in cleaning up the system, published a critique of the NIPFP paper in the Economic and Political Weekly (EPW). In March, the EPW carried a response from the authors of the paper, who had remained unnamed so far, and Reetika Khera’s counter.
The problem with the `study’ is that it is based on no, or outdated, data. It falls back on assumptions.
The NIPFP authors do not deny this, claiming that they have been "elaborately careful in pointing out its limitations", which includes not having adequate data. It also does not consider alternative technologies that "could achieve same or similar savings, possibly at lower cost", to quote Khera. But, the authors protest, "the primary objective of the study: its central question was to ask whether the expected benefits of aadhaar outweighed its total expected costs", so they did not concern themselves with considering alternative means of problem solving, even the ones that are already in place in states such as Chhatisgarh and Tamil Nadu!
In addition, of course, the biometrics reports were out by then, and the implications of biometrics that may not authenticate, one-time passwords, re-enrolment of biometrics and the range of problems in the last mile are not anywhere in the paper.
And, since this is about cost and benefit, it does not take within its ambit matters relating to surveillance, tracking, convergence, tagging, violations of privacy and matters of personal safety and of identity fraud.
There is a further charge that is placed at the door of the authors of this paper – conflict of interest, and non-disclosure of the relationship of the group of authors with the UIDAI. There is a "NIPFP-UIDAI programme on financial inclusion", revealing collaborative activity between the two institutions.
Non-disclosure of this relationship is explained away by the authors as something that "should preferably have been made in the study itself. "At the same time," they say, "the group’s affiliations are public knowledge on its website."
What may these affiliations be, apart from the UIDAI- Macro/finance group working together? The Chairperson of the NIPFP is Dr C.Rangarajan, who is the Chair of the Prime Minister’s Economic Advisory Council. The Governing Body has a representative of the Planning Commission, and a representative of the NCAER and that is officially termed a `collaborative institution’. The UIDAI is located in the Planning Commission, and the Prime Minister and the Deputy Chairperson of the Planning Commission are its strongest proponents. The Chairperson of NCAER is Mr Nandan Nilekani.
The NIPFP paper is being projected as an authoritative study, and the press has been given the figure of over 50 per cent savings as if it were a fact. One of its authors, writing in a national daily, even said, in December 2012:
"When these estimates are put together into a formal cost-benefit analysis, they demonstrate that the internal rate of return on building UIDAI is around 50 per cent in real terms," a position of certainty from which the authors quickly backtracked when challenged. Mr Nilekani, in his talk at the Centre for Global Development in Washington in April this year, told his audience:
"There’s a study, by the way, by NIPFP, which is an independent study on what is the return on this investment." This may, mildly stated, be called a misrepresentation. There is still no study on the implications of the project for the citizen/resident, nor any cost benefit analysis.
(The author is an academic activist. She has researched the UID and its ramifications since 2009)