The Government of India aims to provide a comprehensive set of safety nets to India’s poor, including food subsidies, employment guarantees, and targeted cash transfers. Financial leakages and service delivery issues, however, reduce its effectiveness. The government aims to use Aadhaar’s authentication and fund transfer capabilities to address these problems. Policy-relevant research on the intended and unintended impacts of the use of Aadhaar can provide actionable insights to practitioners.
According to the UIDAI, Aadhaar seeding in beneficiary databases of social protection programmes has the potential to remove duplicate and “ghost” (those who have passed away) beneficiaries. This can reduce leakages by intermediaries siphoning funds in the name of non-existent individuals and save money for the government.
Aadhaar seeding in major programmes
The figure below displays inter-state variation in Aadhaar seeding across major Social Protection programmes.
The figure below provides savings data from the government on account of cleaning beneficiary lists. More data on the role of Aadhaar in cleaning these beneficiary lists will be valuable.
According to the UIDAI, authenticating each transaction digitally makes it difficult for officials and middlemen to siphon entitlements by fudging identity records, thereby helping to curb leakages.
Distribution of e-PoS devices
The figure below juxtaposes Aadhaar seeding in PDS with the proportion of PDS shops with e-PoS (electronic point of sale) devices (it is currently unclear what proportion of these e-PoS devices are Aadhaar-enabled).
Aadhaar enabled transactions in PDS
The figure below shows the proportion of Aadhaar enabled transactions in states that have high take-up of Aadhaar enabled e-PoS devices in the Public Distribution System.
The figure below shows the proportion of beneficiaries facing fingerprint and authentication failures over time in Andhra Pradesh’s pension programme and MGNREGS in Telangana.
Reasons for failures
The figure below provides a break-up of the reasons behind the authentication failures in Andhra Pradesh and Telangana.
The figure below provides the proportion of ration card holders left behind and the reasons behind the failure to collect ration post implementation of AePDS in select mandals of Andhra Pradesh.
Direct Benefit Transfers
Using the Aadhaar Payment Bridge System (APBS), the government can directly transfer benefits to uniquely identified individuals’ bank accounts. According to the government, this can eliminate fake beneficiaries, and certain tiers of intermediaries, potentially reducing their ability to siphon funds. Removing bureaucratic layers can also reduce payment delays.
The figure below showcases the proportion of funds disbursed through the Aadhaar Payment Bridge System as opposed to other electronic payment methods.
The figure below presents the trends in Aadhaar seeding and funds disbursed through APBS over time.