Facilitating COVID responses: Aadhar

Aadhaar, India’s biometrically-enabled foundational ID, serves three major functions of existing social protection delivery: (i) avoid duplication and identity fraud as well as improved coordination across schemes; (ii) enable electronic payments into correct beneficiary accounts; and (iii) biometric authentication at the point of service delivery.

In response to COVID-19, the Government of India launched the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKY), a package of social protection responses – estimated at USD23 billion – to mitigate the economic impacts of the pandemic on the poor and vulnerable.¹ The bulk of the initiatives under PMGKY targeted existing beneficiaries of existing schemes, opposite to expanding to new caseloads.

Aadhaar nevertheless played a key role in identifying and registering new beneficiaries who were not covered by existing social protection schemes. This approach was most tangible in the expansion of the Public Distribution System (PDS), India’s subsidized food assistance program that covered 809 million people prior to COVID-19.²

The state of Uttar Pradesh registered new families into the PDS by cross-verifying their Aadhaar and mobile numbers against the PDS database. Uttar Pradesh also used interoperability between databases of the PDS, the National Rural Employment Guarantee Scheme and databases of the labor department to provide free rations to construction workers previously outside their ambit. Bihar, an East Indian state, undertook a similar exercise to expand the PDS to migrant workers who were hitherto not covered by the program.
The state of Bihar undertook a physical survey of those who worked in transport such as rickshaw pullers, e-rickshaw and auto drivers to issue ration cards to those not covered by the PDS, after cross-verifying eligibility using Aadhaar.
The state of Meghalaya used Aadhaar to identify the marginalized daily wage earners left out from the NREGS and the Building and Construction Workers’ Welfare (BOCW) Fund to support them with a new cash transfer.

Aadhaar was equally critical in the delivery of payments for cash transfers. The Aadhaar-enabled Payment System (AePS) allows beneficiaries with Aadhaar numbers to withdraw at Micro-ATMs through the Banking Correspondent (BC) of a bank. The payment system emerged as a key cash-out infrastructure for beneficiaries, with AePS payments doubling just after the social protection measures were announced.

Pre-pandemic preparedness was one of the key factors that enabled some schemes to leverage Aadhaar seeding to provide a timely response. In contrast, PM-KISAN, a pre-COVID targeted income support program for farmers that advanced payments to help mitigate the COVID-19 shock, could not pay 20 per cent of the 87 million beneficiaries due to dated land records and unresolved problems with Aadhaar seeding.³ Similarly, of the estimated 50 million building and construction workers who were eligible to receive cash assistance from BOCW funds, only 18 million could be paid via electronic cash transfers as the rest were not registered prior to the crisis. In terms of payments, though the AePS did scale up, it was not adequate to absorb the unparalleled spike in demand. For instance, in April 2020, 39 per cent of the transactions, equivalent to 257 million transactions, failed – underscoring the need to enhance the scalability of the architecture.⁴

While the COVID-19 experience has illustrated various innovations in identifying new caseloads and delivering assistance via Aadhaar, it has also highlighted the structural limitations that need to be overcome to realize the potential of Aadhaar. First, Aadhaar can facilitate better coordination across programs. Nevertheless, this coordination will depend on a deliberate policy shift away from operational and institutional silos. Second, Aadhaar cannot play an optimal role in reaching marginalized populations unless they are registered into existing social protection programs and databases.

Future reforms should tap into Aadhaar’s transformative potential. As programs and databases expand, a dynamic integration of databases, embedded in a clear framework and data protection law, becomes important. Such integration and coordination should not only focus on de-duplication (i.e. using unique identifiers to identify receipt of multiple benefits by a single household) but more importantly, it should facilitate proactive registration of beneficiaries into all programs for which they are eligible.

Footnote

Componente

Coordination and Delivery Systems

Coordination and Delivery Systems: Responding to COVID

Further reading:

Footnote