Sunday, October 16, 2011

Why is Aruna Roy against the UID project?

Since I have high regard for Aruna Roy, I am a bit surprised by her stiff opposition to the UID project that Nandan Nilekani is leading. The way I look at it, the UID project is a revolution in the making. Secretly, I was hoping that it would not draw too much attention before it was fully implemented – worried as I am that the political class would try to derail it midway if it understood its full potential. It’s potential to curb corruption. It’s potential to prevent fudging of electoral rolls. Over the last few years, Nandan Nilekani has rolled out the project with his characteristic efficiency – over 10 million people have already been finger-printed, iris-scanned and databased. In a few more years, more than the half the country will have UID numbers.
If each person in the country could have a unique identity (number), what could possibly be wrong with that? The benefits of the UID are enormous. The first and most important benefit is that once the people are uniquely identified, government subsidies can be targeted at them with full precision. Today, no one knows who the real beneficiaries of the subsidies are. The government spends lacs of crores of rupees every year on these subsidies; but instead of them reaching the poor, they end up lining the pockets of the middle-men in many cases.
The way the present subsidies work is as follows. Let’s say the government gives wheat at Rs 3 per kg to the poor. Let’s say 35 kgs of wheat are given per family per month. Let’s say that the government has acquired the wheat at Rs 11 per kg (Minimum Support Price). The subsidy is thus Rs 8 per kg. The tab that the government picks up as subsidy is thus Rs 8 x 35 kgs = Rs 280 per family per month. Currently, wheat at subsidized prices is given to the PDS network. The poor are expected to go to the PDS shops (“Fair Price Shops”) and get their quota of wheat by paying Rs 3 per kg. When they do this, they get a “stamp” on their ration cards, indicating that the quota has been used up. There are many leakages in this current system. The first major problem is that there is no way to ascertain how many of the ration cards are genuine and how many are bogus; Then, it’s impossible to know how many of them are availing of the subsidized grains; Many people who have risen up the social ladder have stopped going to these shops. But the government still sends the grains meant for these people to the PDS shops. The PDS shopkeeper happily diverts the wheat to the open market – selling the same at market rates and making a killing. There are also complaints about the quality of the grains given to the poor – again the PDS shopkeeper diverts the good quality grains to the market and substitutes it with poor quality stuff at his shop. The government of India bears the full subsidy burden – thinking the poor are benefitting – but in reality the real beneficiary is the PDS shopkeeper.
In the UID era, there will be no subsidized grains flowing through the PDS system. Instead, subsidy for 35 kgs of wheat will be deposited directly into the poor family’s bank account as cash. The bank account itself will be opened on the back of the UID number and card. The poor can withdraw the cash and go to the open market and buy the grains. The poor can also substitute the wheat for rice if it so wants. The government still pays out the same subsidy, but this time, the subsidy is indeed reaching the poor. In the past, the government had proposed “food stamps”, but the UID scheme can handle the same job much better.
Also, once the UID scheme is implemented fully, it will be possible to know how many poor people really exist. Since the number of poor is a moving number, we need a modern and electronic method to know their real numbers. For eg, once a person gets a job at a PSU, that UID number could possibly become ineligible for subsidies after a few years. Also as the Income Tax database is integrated with the UID database, many people who have risen up the economic ladder could be made ineligible for subsidies. Once a decision is taken to de-activate a particular family, the government would simply stop depositing cash into its bank account.
Here’s another problem with the system today. If the poor family moves from Bihar to Maharashtra, the PDS system today is unable to handle this change in address quickly. It would take months for the system to effect the change in residence and in the process, there is a real chance of a duplicate card being created – the original one in Bihar still existing while a new one at Maharashtra gets created. There are systems in place to prevent this; however in reality, this is one way in which bogus cards are made. In the UID regime, it wouldn’t matter where the person was staying, as the subsidy is given directly into the bank.
There are many other advantages of the UID number. Once all other identify proofs and numbers are integrated with the UID, it will become the single source of identity for every person in the country. The number of frauds will also reduce – for eg, if a person has mentioned two different PAN card numbers in two different documents, it is impossible to detect that today; but in the UID system, it will immediately be seen.
If DNA samples were collected alongwith the other things, then the UID system could also help reduce crime drastically. Whenver a crime takes place, there is a lot of evidence that the perpetrator invariable leaves behind. The evidence includes finger prints…..maybe some biological tissues (blood…) etc. These could then be run against the UID database and the perp identified.
Net net, the UID scheme is a progressive plan; it has many advantages. Of course, there are problems also. For eg., some experts are worried that once the cash reaches the accounts of the poor, it may be diverted towards things like liquor rather than foodgrains and education. This is a real fear and only social pressure can help prevent it from happening.
Aruna Roy has made very general accusations against the UID. One of the comments she has made is that the UID database is being managed by a private firm. She believes that the private firm could leak the data or even sell it. But honestly, there are ways to control this risk – by imposing strict regulations on the firm. Then she talks about some communal risk – I don’t quite know what she means by it. She should elaborate on it so that a meaningful discussion can take place and risks reduced/eliminated. There is also this complaint that biometrics are not cent-percent effective in identifying people uniquely. The UIDAI’s study shows that the error is only 0.01% and even that can be eliminated with a photograph used alongside.
The real truth is that the UID scheme is an ambitious plan and it should be supported fully. Once the entire country is covered with unique numbers, it will be possible to make sure bogus ids are eliminated; the poor get the targeted benefits and corruption is reduced. If there are some problems with the program, they must be discussed and eliminated. But raising fears in the minds of people as Aruna Roy is doing is certainly not a good idea….

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