What is the #1 megatrend around us in India? If you sift through all the big ones – migration, social media and ease of communication, crony capitalism, deep logistics, middle-class entrepreneurship, to name a few – it is reasonably clear that there is just one big one: the most number of young people anywhere in the world live within our borders.
That makes us in India the world’s biggest market – by volumes, not necessarily value – for a bunch of services and products that the young consume: education, health, food, consumer goods, phone and entertainment services — and, as uniquely, for services offered by government and quasi-government services.
That so-called demographic dividend also comes with its risks. While more than one-third of the world’s youth (age between 15 and 24 years) is in India today, the number of 60-plus people crossed 100 million for the first time when recorded in the 2011 census. Additions to that group are rapidly increasing every year and India’s population bulge in the middle moves upwards.
The writing on the wall is clear for those who want to read it. If India continues on its current trajectory of low tax compliance among its citizens and establishments, it is headed into a breakdown in governance as we know it today. There will be pressure to finance the services offered or supported by the state that we take for granted today.
Most of the Indian state’s decisions in recent years point to a realisation by the powers that govern us: there just ain’t enough money to go around. Whether it is not passing on benefits of low crude oil prices until about a year ago to petroleum product users and, in turn, using it plug the fisc. Or, the hurried – and, with hindsight, ham-handed – imposition of goods and services tax, or GST, which despite its short-term pains promises much in the 2020s. Or, of late, the efforts to keep within India, and for Indians, the benefits of an exploding local digital economy.
Going by the latest data on those who file income tax returns, there is some momentum in a positive direction. For the financial year gone by, the Indian government received over 54 million filings from individuals, which is nearly double the number in 2013. To be sure, all of the 54 million-and-some don’t pay taxes. Still.
One way to boost profits – or, in the case of the government, reduce losses – is to raise revenues (read: tax and other cesses). The other way, of course, is to decrease costs. The four heads that the Indian government spends most on are: interest payments, government salaries, defence expenditure, and subsidies. There is precious little that the state can push on with the first three – yes, even a majority government like the Narendra Modi administration – but yes, it can do a thing or two with the leaky bucket of Indian subsidies.
A big effort in that direction has been the Aadhaar project, started by the previous government under Manmohan Singh. One of the main selling points of the citizen ID project has been better subsidy and benefits targeting. India may be the world’s fourth-ranked economy by purchasing power but its high levels of income inequality mean that the state will have to target subsidies and other support with some degree of accuracy to be able to not squander away resources.
How does it do that? By knowing who to reach that support. How? By uniquely identifying each citizen. How in a dispersed and, often poor, population like India’s? By using a number backed by the biometrics of the citizen.
Aadhaar is arguably the most controversial of Indian government projects in recent years. Even in an era of mass distraction orchestrated by close-to-the-state and other actors on social media, Aadhaar had top-of-mind recall with debates among people aware of the benefits and risks of tools that the state uses. The project ended up in the highest court of the land. With the Supreme Court in effect ruling that Aadhaar was legit, with some exceptions, the controversy has been pretty much laid to rest.
But, the Aadhaar story needed to be told and that is what journalists N S Ramnath and Charles Assisi set out to do in their book The Aadhaar Effect: Why the world’s largest identity project matters. (Early disclosure: I know both Ramnath and Charles professionally.) The book comes from the stables of Founding Fuel, a learning platform for the enterprise of tomorrow.
For anyone with a passing interest in Aadhaar, here’s the review simply: read the book. It may not be the best and last story of the ID project but is rich for how it came about, the various actors in its journey so far, the context in which it was born and grew (hijacked?), and the possibilities ahead. Note to Ramnath and Charles: do revisit the subject in 2028 and give us a new book.
Ramnath and Charles are seasoned story-tellers (Charles is the veteran of the two). They belong to a crop of English business journalists in India who have managed not to let their brains slip to their knees. They combine the fine art of the narrative (‘show, don’t tell,’ as the adage goes) with the depth of facts to back a point. Rarely will you find a logical hole in their argument and that approach shines in this book.
Early on in the book, they set the need in India for a “foundational” as different from a “functional” ID. A foundational ID would just identify who you are (name matched with ID) as different from the functional IDs that we in smaller cohorts are used to: ration card, driving licence, passport etc., which serve a primary function but are also used as proof of identity. Viewed from this simple prism – and keeping in mind the fact that large swathes of the Indian population don’t even have a voter ID – the need for Aadhaar makes sense.
A refreshing point through this book is the reporting by the authors that make it possible for them to give credit for different features and highpoints of the Aadhaar project and journey where it is due. For instance, the foundational vs functional point is made by Shrikant Kurwa, an Aadhaar volunteer who went on to work for the World Bank Identification for Development initiative. The Aadhaar name popped up in a conversation that another volunteer Naman Pugalia had with a villager in Rajasthan. The Lego analogy – expanded inadequately in the book, I thought – came from Pramod Varma, the projects chief technology architect. The ‘identity project versus identification project’ descriptor by Aadhaar critic Usha Ramanathan. Nachiket Mor for the idea to have an ID with just a number authenticated by biometrics.
Interviews by Ramnath and Charles were long and wide. Nuggets from Nandan Nilekani, the brain and former chief of Unique Identification Authority of India which implemented the project, and wife Rohini Nilekani give a behind the public facade view into their minds. Nandan compares his time at UIDAI with his nearly three-decade stint in corporate circles: “I dealt with such complex situations and such “bad actors”… In some sense, a corporate situation is a piece of cake; intellectually it’s not complicated. In government, it was people with their daggers drawn. You won’t meet them in a dark alley… the big thing about the last ten years was that I have become comfortable with (confrontation).”
Rohini, who describes herself as a Left liberal, says she was frightened and opposed to Aadhaar for one-and-a-half years. “I am suspicious of the state anyway – and that has nothing to do with Aadhaar…” After a lot of arguments – “Loud ones.” – she says, she began to see it “more in the way Nandan saw it”. “We have 500 million people who don’t have access to basic services. Aadhaar is one of the things – not the only thing – to help them,” she tells the authors.
Ever the unreasonable editor, what do I think is missing in the book? For one, much of the background stuff from the first two years of Aadhaar is missing. The book does cover the skirmish between the offices of Nilekani when he was UIDAI chairman and those of the then Comptroller and Auditor General Vinod Rai’s offices with Indian Administrative Services batchmates Sudha Pillai and Gopal Pillai in the background but leaves unsaid other stuff that journalists of the time were regularly briefed on. E.g.: how Nilekani packaged the first phase of the Aadhaar project as a pilot project. It would have been the first time anywhere in the world that a pilot project meant to be a proof of concept that ended up covering 100 million citizens and was extended to another 100 million subsequently.
I would have loved to have deeper answers to three questions: one, when and how did was Aadhaar converted from a voluntary ID to a mandatory one, especially since the book suggests that Nilekani himself was not happy about it? Two, what is the real thinking of the Indian government of today on the surveillance potential of the project and do the laws of the land adequately have the back of citizens on that? Three, is there truth to the savings of some Rs 57,000 crore to the exchequer by way of direct benefits transfer thanks to Aadhaar?
But, these are more in the territory of quibbles about an otherwise solid tome on the world’s largest identity project.
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Updated at 09:28 am on October 31, 2018 to add pictures of the authors.
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