Former Chairman of the Unique Identification Authority of India, Nandan Nilekani, addresses the gathering during an interactive session ‘Digital Evening’ in Mumbai, Jan. 19. (Shashank Parade/PTI)

India is on a “very good wicket” on privacy in this age of digital technology, architect of the Aadhaar scheme, Nandan Nilekani has said, expressing confidence that the government’s unique-identity number plan would be able to successfully pass the test of privacy. According to Nilekan, the Indian government’s Aadhaar card scheme, which has enrolled more than 1 billion people, has helped the exchequer save about $9 billion by eliminating fraud in beneficiary lists, writes Lalit K. Jha.

Addressing an audience at an event organized by the Center for Global Development on the sidelines of the annual meeting of the International Monetary Fund and the World Bank, Nilekani said, “I think India is on a very good wicket on privacy.”

Thanks to Aadhaar many activists went to the Supreme Court and they claimed that it was a privacy violation, said the 62-year-old non-executive chairman of Infosys—India’s second largest software services firm.

That challenge by activists, he said, led to even more existential question – In India, is privacy a fundamental right at all?

The question went to a nine-judge Supreme Court bench and they gave “what I call one of the best judgements” in the Supreme Court history, he said, responding to a question on privacy and Aadhaar card.

“And they (judges) said, yes privacy is a fundamental right. However, the state can circumscribe that privacy for specific social goals,” he said, adding that they identified national security, prevention of crime prevention, protection of revenue and social welfare benefits as the four reasons.

Nilekani said that the judges said that circumscribing of privacy has to be based on three things.

It has to be based on a law.

It has to be based on the test of proportionality and reasonableness.

Now that the judges have laid a framework, there would be a second bench of the court, which will test whether Aadhaar meets that framework.

File photo of an AADHAAR registration camp at the Public Information Campaign organized by the Press Information Bureau Thiruvananthapuram, at Vithura Grama Panchayath, Kerala, Nov. 26, 2014. (Press Information Bureau)

“We’re very confident that it will,” Nilekani said.

Responding to a question, Nilekani said that from a policy perspective “it has to be clear” that nobody should be denied an entitlement due to lack of access to technology.

A good system would obviously have the ability to save if there’s no connectivity or environment does not work, one should give the overriding capability to the service provider.

So, it is important to make sure that technology does not come as a hurdle in providing benefits to people.

A combination of well-designed override with fraud analytics can solve these issues.

“As people learn the system, they are going to do that,” he said.

According to Nilekani, there are many challenges that require a platform thinking as a public good.

“It’s important that we recognize that such a category exists. If a particular service or product is offered through a commercial platform that’s great. Nobody’s saying no to that but there is a problem that only can be solved with societal platform for the public good. That is unavoidable,” he said.

Societal platforms, he said, is not about excluding market participants.

Societal platforms, he argued, creates the level playing field and then market participants can operate on that.

It’s entirely possible that the entire digital payments that are provided by a combination of public financial institutions and private banks.

But the societal platform provides the rules of the game, he said.

That is the role of society and government to provide the rules of the game.

“That’s what this is all about. So think of this as one more way of enforcing the rules of the game,” Nilekani said.

Non-executive Chairman of Infosys, Nanadan Nilekani, speaks during a press conference in Bengaluru, Aug. 25. (Shailendra Bhojak/PTI)

Aadhaar Helped Indian Gov’t Save $9 Billion

The system, launched by the previous UPA government, has been enthusiastically supported by the current government led by Prime Minister Narendra Modi, and Finance Minister Arun Jaitley, said Nilekani, the 62-year-old non-executive chairman of Infosys—India’s second largest software services firm.

It has really been a bipartisan thing, Nilekani said while participating in a World Bank panel discussion on Digital Economy for Development, recently.

He said that it is easier for the developing countries to leapfrog by building a right digital infrastructure.

Aadhaar now has more than a billion people registered on its system, he said.

“It has also saved the government about $9 billion in fraud and wastage because by having that unique number you eliminate fakes and duplicates from your beneficiary and employee list,” Nilekani said at the event on the sidelines of the annual meeting of the International Monetary Fund (IMF) and the World Bank.

“We have about half a billion people who have connected their ID directly to a bank account. The government has transferred about $12 billion into bank accounts electronically in real time to the world’s largest cash transfer system. There are many, many, things like that.

“I’m a big believer that if you build the right digital infrastructure then you can leapfrog,” Nilekani, the former chairman of Unique Identity Development Authority of India (UIDAI), said.

In the new world of data economy, identity authentication, frictionless payments, paperless transactions these are all very important layers of the new digital economy. That is what India has done, he said.

India is the only country in the world where a billion people can do completely paperless, cashless transactions on their mobile phones using this infrastructure which dramatically reduces costs.

“Once you bring cost down, automatically inclusion happens,” Nilekani said, adding that there is a fundamental strategic way of looking at it.

Now it is very clear that data is where the action is, he said.

The infrastructure that India has created enables every individual to use his or her data for their advancement, which is fundamental. Herein an individual used data for their personal advancement, Nilekani said.

“There is a fundamental inversion happening of the way we think of data, which is unique,” he said, adding that this has a lot of implications for the bank and people in public policy who have to look at what’s the new rules of the game in the economy.

Responding to a question, Nilekani said the World Bank has really done a great job in internalizing the concept of digital ID.

A high-level panel having representation from about 15-20 countries met to have discussions on it.

When one has this digital ID, one can authenticate oneself through a system and get the own data out, he said.

Noting that in India the Supreme Court has declared privacy as a fundamental right, he said the apex court has also laid down a framework that even when the government need to achieve a state objective then they can circumscribe some of those privacies.

“It says for national security, for prevention of crime, protection of revenue, or for social welfare,” Nilekani said.

But the court said, every time the government circumscribes the privacy, it has to be a law, it has to be reasonable and it must be proportional.

Nilekani said that the question of how data use can address inequality has not been discussed enough.

“When the internet happened in the West in the last 15 years… the West was economically rich before they became data rich,” he said.

But in developing countries people have become data rich before they become economically rich, Nilekani said.

“So, in a society where per capita income is $1,500 and you are data rich, the business model is how do we create an architecture where individuals and businesses are able to trade in their data to improve their lives. That is the heart of the question.

“If I, as a consumer, can use my data to get better loans, better education, better jobs and better skills, and if we can get a billion people to get access to that they will use data as the ladder to improve their lives,” he added.