Lalit K Jha | PTI
The IMF has said India should take necessary measures to ensure privacy and security controls while implementing large identification programmes like the Aadhaar, as the global financial body identified India as a leader in the biometric identification system.
The International Monetary Fund in its fiscal monitor report on digital government said digitalisation can facilitate stronger governance and fiscal transparency, allowing better public awareness and scrutiny of the budget process and the design of fiscal policy.
In India, the IMF on Thursday said, biometric identification and electronic payments have helped reduce leakages in LPG subsidies.
“Depending on assumptions and how the reduction in leakage is expressed — that is, the reduction in total transfers or wrongful payments — estimated savings from digitalisation range between 0.2 and 21 per cent of cash transfers and 11 to 24 per cent of wrongful payments,” it said.
“It is difficult to disentangle the effect of digitalisation from broader macroeconomic and policy developments,” the IMF said.
For example, the use of Aadhaar in the LPG subsidy scheme coincided with the termination of the LPG dual pricing system and the reduction in the world price of natural gas, both of which helped reduce the cost of LPG subsidies.
Data limitations and lack of proper assessment frameworks constrain ex-post evaluations, the report said. “With more than 1.2 billion registered citizens in India’s biometric identification system, Aadhaar, the country stands out as a leader in this area,” the report said.
The IMF, however, stressed that governments should take necessary steps to ensure privacy and security controls when implementing large identification programmes.
“In India, privacy and security concerns led to alternating periods of mandatory and non-mandatory use of Aadhaar in social programmes,” it said.
“A court decision is still pending on its compliance with the right to privacy. In a recent data breach in India, it has been reported that 135 million Aadhaar numbers were compromised, underscoring the importance of sound privacy measures,” it added.
The report noted that spending should also be consistent with the government’s budget constraint and will require policy-makers to create fiscal space for purchasing new technology, storing large amounts of data and hiring cyber-security experts.
Cost estimates are rare and incomplete, it observed.
“In India, data from the Unique Identification Authority of India place the costs of Aadhaar implementation and maintenance at about USD 1.5 billion or USD 1.25 per card between 2009 and 2017 but this compares favourably with the costs of other electronic identification systems of USD 3 to USD 6 per enrollee,” the IMF said.
Given its broad coverage, IMF believes that it may be a challenge to phase Aadhaar out.
“Advocates of the system assert that Aadhaar is compatible with the right to privacy because the captured biometric traits are encrypted, making it difficult for anyone who intercepts these images to access the actual content,” it said.