The Comptroller and Auditor General [CAG] has exposed diversion of subsidized food meant for poor households under the National Food Security Act [NFSA] in Delhi – using fraudulent means such as fake ration cards, fake mobile numbers etc – causing loss of over Rs 7000 crore to the exchequer. This is one among several such scams resulting in massive leakage from Rs 145,000 crore being the food subsidy spent by the union government annually.
Likewise, there are monumental leakages from other welfare schemes such as fertilizer subsidy, LPG subsidy, MGNREGA [Mahatma Gandhi National Rural Employment Guarantee Act], education subsidy, pension, power subsidy etc. In other areas such as real estate, a handful of persons appropriate public land in prime locations – in the name of poor – using fake ration cards/addresses. Then, you have fake SIM cards, fake driving licenses, fake passports etc.
The operators also use fake persons/fake companies [known in corporate parlance as ‘shell companies’] for generating/laundering black money thereby denying legitimate taxes due to the government. A deposit of Rs 350,000 – 400,000 crore post-demonetization testifies to the scale of unaccounted money on which no tax was paid.
Faking of bank accounts, addresses, phone numbers, invoices and other documents also play a major role in defrauding banks. But for these, the gigantic loot of the second largest public sector bank viz. Punjab National Bank [PNB] early this year, by over Rs 13,500 crore would have been unthinkable. Inflated/fake invoices have also been brazen used in a number of other bank frauds unveiled thereafter.
The use of Aadhaar card – a 12-digit unique identification number issued to every citizen – identifies the self with his/her biometric details viz. photograph, finger print, iris scan etc which cannot be faked. It serves as a powerful tool to put an end to faking ration card, PAN, SIM, driving licenses, passports etc. By linking all such documents to Aadhaar, the government can prevent leakages from subsidy/welfare schemes, prevent money laundering, rein in shell companies, increase tax collection, combat terrorism and prevent scams. Indeed, it can curb all wrongful activities which thrive on faking.
In this backdrop, the government got the Aadhaar [Targeted Delivery of Financial and Other Subsidies, Benefits and Services] Bill, 2016 passed. The Act made it mandatory for a person to enroll him for Aadhaar to be eligible for receiving a subsidy or government service. Further, vide Finance Bill for 2017-18, it amended the Income Tax Act [1961] to make seeding of PAN [permanent account number] with Aadhaar and filing Income Tax returns mandatory.
The benefits are evident as the government has already saved close to Rs 90,000 crore during the last three years by latching on to direct benefit transfer [DBT] of subsidies and other benefits to the bank account of beneficiaries seeded with Aadhaar. These will increase manifold with the centre planning to disburse 75% of its subsidies [up from 35% currently] on DBT platform and even the states intending to follow suit for implementation of their subsidy programs.
But, the constitutional validity of Aadhaar has been challenged in a clutch of petitions on the ground that it infringes on the privacy of an individual. A five-judge constitution bench headed by Chief Justice Dipak Misra is currently hearing arguments in the case.
What will be the fate of Aadhaar? This will be known only after the apex court delivers its verdict. Meanwhile, its stance as reflected in its observations during the hearing seems to be giving disproportionate attention to privacy issue and under-rating the importance of what Aadhaar can deliver in terms of stopping pilferage and channelizing resources for the benefit of the poor.
It has opined that “Aadhaar can do little to stop banking frauds. Bank officials were “hand-in-glove” with fraudsters and that scams do not happen because the culprits are unknown. Banking fraud does not happen because of multiple IDs. Aadhaar will not prevent a person in different capacities and through various entities could enter into multi-layered commercial transactions and take loans which are not “illegal per se”. The argument is untenable.
True, it is difficult to prevent fraud, if the fraudster acts in collusion with bank officials. But, merely because the official will collude, can one dispense with safeguards or for that matter, even the KYC [know your customer] norm? The rules and regulations cannot be dispensed with under any circumstance – much less in a situation when it is suspected that a bank official will collude with the fraudster.
As regards the example “a person could enter into multi-layered commercial transactions …… and take loans”, the very purpose of insisting on Aadhaar is to prevent such a situation. With Aadhaar made mandatory for any transaction with the bank, this person cannot hide behind other entities for taking multiple loans. Moreover, with biometric details [unique to the person] in records of the bank, in an event of his eloping with the money, the investigating agencies will find it much easier to nab him.
The court has also questioned the Centre for asking the entire population to link their mobile phones with the unique identity card “just to catch a few terrorists”. Have the hon’ble judges thought through the devastation caused when a terrorist plants a bomb in a busy/crowded market? To prevent such situations, even if all mobile phones in India are seeded with Aadhaar, it is worth it.
The court has also questioned Aadhaar authentication for each and every activity of the citizens. This objection too is misplaced. The linkage with Aadhaar is only in those areas viz. subsidies and other state benefits, bank account, mobile number, PAN number, passport, driving license etc wherein the implications for the national economy, security and people welfare are far reaching.
As regards alleged invasion of privacy, the government has made it abundantly clear that the information sought is bare minimum needed to serve the intended purpose. To say that it could go that far to ask for blood group, semen etc of a person is sheer imagination with the sole aim of discrediting a transformative reform.
Hopefully, the apex court will not do anything which undermines the effectiveness of Aadhaar – let alone killing it in the name of alleged invasion of privacy of a citizen.