Universal Identity: Perspective from India Executive Summary: Broad-based government-mandated issuance of identity credentials is a controversial initiative.

Nonetheless, in an emerging country, identity credentials can be a valuable enabling infrastructure to help the economy lead in the 21st century. This article will look at the India's Unique ID initiative, Aadhaar, from a business perspective and in the context of the government delivering subsidies and services. Introduction: Universal identity credentials are turning out to be the foundation of modern digital society. Whether one wants their government to be involved with aggregating and managing such information is a controversial topic. Countries like Singapore have pulled it off successfully and are reaping the benefits of universal identity. Countries like the US, due to the fear of big brother, may not go down this path just yet. Universal Identity - Foundation of the Digital economy: In a world plagued by electronic fraud, identity theft, funding of terrorism, money laundering, service providers are mandated to know their customers (KYC). In a world where consumers are used to instant gratification, consumers are not interested in waiting for service providers to process KYC documentation before consumers can start using the services. Additionally, when the lifetime value of customers is low, like in India, the fixed costs associated with meeting the KYC norms destroy the feasibility of many businesses. A universally accepted [federated] identity addresses the above concerns in one shot. While private enterprise issues identity credentials (e.g., Equifax), their use and sphere of impact is intentionally limited. It is widely believed that only the government has the ability to be the issuer of [broad-based] identity credentials, primarily due to liability concerns in case of identity fraud. The Indian government, in a bold stroke of genius/naivet has jumped on the universal identity bandwagon. Aadhaar, India's Universal Identity program, is a bold move by the government with aggressive timelines and associated funding. This initiative plans to issue 100M credentials in its first year (budget of $413M @ INR46/1$), and a total of 600M credentials over 4 years (estimated cost of $1.4B). The scope of coverage is comprehensive, which includes both urban and rural India. Aadhaar credentials are to be distributed to all residents of India. Another reason for the buzz around Aadhaar is that it is lead by Mr Nandan Nilekani, co-founder of Infosys. History: Like any other society, Indians have also been issued many credentials. PAN (by the Income Tax department), Voters ID Card (Election Commission), Ration Card (to BPL citizens) However, India has been impacted by fraud associated with fake identity credentials. Over 1 million duplicate PAN Cards have been in circulation, which are getting cleaned up (source). Starting with a clean slate by issuing identity credentials is a way to get around existing problems. The initial objective of Aadhaar is to improve efficiency and efficacy of delivery of government subsidies, grants and services to its residents (primarily the poor). I will not discuss here the likelihood of Aadhaar being able to address the related ills that plague government programs. However, I will keep the focus of this article to identity credentials to poor in India, which is about 200-300 million citizens.

Authentication Factors associated with Identity: To repeat a clich about India, India has many Indias in it. A broad-based program like Aadhaar that touches each resident needs to be built on the least common denominator across a diverse populace. This least common denominator happens to be a unique number that is assigned to the individual. This is the what you have factor (not a card, but just the number). In a land where literacy is not universal, the what you know factor is difficult to implement. The who you are factor is biometrics. Fingerprints have formed the proof of identity in rural India and is culturally acceptable. At the time of registration, the individual is assigned and issued a unique number (12-digit number). Subsequently, at the time of accessing any service that requires proof-of-identity, the individual provides their unique ID and swipes their fingers against the fingerprint reader. This is easy enough and can be an affordable system. Please note that the Aadhaar does not issue a card or token as proof of identity. This practical decision by Aadhaar increases chances of its success and keeps the implementation costs low. History of Identity Cards in Rural India: Over the past many years, government and private service providers, have been issuing identity credentials to poor. Barcodes, Magstripe cards, contactless memory cards, contactless processor cards and smart cards have been issued. The harsh environment/ambient conditions of villagers (dust, dirt), are not favorable to carrying cards. The life of physical cards are extremely short and support costs high. Consequently, based on the card issuer and the context of the usage of identity credentials, the issuer can decide the what you have media. Biometrics: Fingerprints have been a tricky factor for authentication. About 10% of the rural poor have their finger prints smudged from years of working their fields. Retina scanners are still very expensive for mass deployments. Nonetheless, the ecosystem is rallying around this wonderful opportunity to solve these basic problems. Innovations: Most things that China and India do result in mind-boggling numbers. o Managing about 600M identity credentials in a low-cost manner could result in innovations in distributed architecture. o Need for large-scale deployment of finger-print scanners is expected to drop the price of scanners to a fraction of their current costs, as well as, create a base of indigenous manufacturers. o Another side-effect of affordable finger-print scanners might be the resulting ubiquity of this feature in mobile devices. o As India grapples with citizens with smudged / missing finger-prints, we might see low-cost retina scanners (or similar biometric scanners) emerge. Usage models of identity credentials: o MGNREGS: Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is a rural employment guarantee scheme that provides qualifying households work for a minimum number of days (e.g., 100 days) at a minimum wage. Identity validation is a core aspect of the implementation process, including during registration, availing benefits, funds dispersion... o MicroATM: In rural India, bank branches are not practical and/or feasible in remote locations or sparsely populated villages. MicroATM is a low-cost device which offers frequently used branch services, thereby saving banks the cost of opening branches and the consumers the trouble of getting to a bank. These devices would accept and validate identity credentials as part of the service delivery process.

Mobile POS: In a country where 600M mobile phones exist, mobile phone based devices are a cost-effective alternative to the single purpose EDC/POS terminals. Mobile POS devices, used by merchants/banks, have the ability to validate identity credentials before the consumer can access funds in their accounts. Public Distribution System (PDS): Government benefits include a set of staple set of essential commodities. Distribution of these benefits has been affected by pilferage and benefits end up in the wrong hands. Use of identity credentials are seen as a mechanism to bring about transparency and efficiency in the delivery process.

Criticism: In any project that involves issuing identity credentials [to all its residents/citizens], civil liberties and privacy concerns are among the many concerns. Additionally, biometrics and other PII data of 600M citizens is a juicy target for criminals. Summary: While, on paper, Aadhaar is the right thing to do, it is debatable whether Aadhaar will be a success. Additionally, given the many demands that the government has in addressing the needs of the poor, the investment in Aadhaar has been questioned. Having said that, universal identity for its citizen may well show up as a necessary infrastructure requirement for the leading nations in the 21st century.