UID as Userís ID

The government appears to be working towards an amicable solution on the question of who can collect biometric information data for the Indian population. There has been disagreement about whether this will be done by the UIDAI headed by Nandan Nilekani, or the National Population Register headed by Home Minister P. Chidambaram. It now seems that both may continue to collect data but share its use.

When any country sets about building biometric tracking of each individual, with full information held by the government, there are concerns about privacy and protection for the individual. There is legitimate concern when governments are given more information and more power. There is much merit in this discomfort. Elaborate systems of checks and balances are required before giving any power to the government.

As the many attacks on freedom of speech around us demonstrate, Indian democracy is as yet a fledgling project. Judges are supposed to be the ultimate defenders of freedom, but we even have judges who want censoring of the Internet as in China. A population-wide biometric UID, whether implemented by the UIDAI or by the NPR, could prove to be dangerous in the hands of an authoritarian government. The concerns of those who are worrying about the interaction between biometric databases and the Indian state are in that way legitimate.

There is, however, one class of applications of biometric identification which is unencumbered by controversy. This is about implementation of government transfer and subsidy programmes.

At present, product subsidies (for instance diesel or LPG) are done when the government is not able to clearly identify the poor. A government that cannot identify the poor tends to indulge in wastage of public resources, giving money to all users of diesel or LPG. The bulk of LPG or diesel is consumed by the rich, so the existing subsidy programme is extremely inefficient. This is effectively a reallocation of resources from the poor to the rich. The money that is spent here is money that could have been used for producing genuine public goods such as police or judiciary, in establishing water and sanitation systems, or in building railway lines. The money that is spent here drives up the fiscal deficit, which hurts everyone through maladies such as inflation and reduced GDP growth. The net effect of not targeting a subsidy properly is undoubtedly bad for the poor and bad for everyone.

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