I have spent the last 10 days in India concluding my 12th visit in 7 years. I have seen quite a noticeable progress in the rickety infrastructure each and every time I go, as India walks away from the past and races to the future. However, this time I saw progress in a different, less obvious way.
Last month, the Indian government rolled out the first country-wide AADHAAR ('foundation' in Hindi ) to an Indian resident. This will be a unique 12-digit identification number, like a social security number that ultimately all Indians will possess. The government hopes to complete and issue at least 600 million IDs to its 1.2 billion citizens by 2014.
Currently, there exists a limited quasi-social security number in India, however the government is intending to reach out to the rural and less connected masses as part of the program. Formalizing and documenting the 'official' identity of millions of the rural poor will, among other things, help them bypass more expensive money-lenders and tap into the formal banking system. What is unique about this initiative though is the format and approach to the effort, and how it dramatically differs from the similar process in the United States.
In the US, as you know, all babies at birth are issued social security numbers, along with a snappy little bluish-white paper card (that some people still bizarrely carry around with them!?) printed with a unique nine-digit number. As easy as it is to counterfeit or replicate it, some places, believe it or not, still ask for the card as some legitimate proof of identification – think of the DMV as you try to renew your driver's license. No surprise there.
The AADHAAR, however, will be printed on a smartcard or other official document that will include 3 factors of identification unique to the person: an iris scan, a photograph and all ten fingerprints. To get a number, Indians will have to physically go to an enrollment agency and submit their credentials that will ultimately be collected in a central repository.
Orwellian fears and privacy concerns aside, what this will mean to the Indian economy is monumental. Soon, millions of Indians who are otherwise prevented from participating in the growth of the sizable economy will now be plugged into the system and able to leverage money and services that were never available to them before. In turn, millions, maybe billions of rupees in revenue that would have gone to the black market or otherwise unreported (and untaxed) can now be put to better use. Think of the number of new jobs that will be created to both implement and support this system once it is effected.
These new jobs won't all be the classic government-teat-sucking positions that you might think they'd be. Software has to be developed and supported; card readers will have to be created and deployed. All areas of the private sector will be prodded to build new ways to accommodate and authenticate their customers across a number different mediums. The US should take note here as the rest of the world moves to smartcard technology, while we stick with traditional magnetic strip technology and easily forged driver's licenses.
India will face many challenges as it attempts to implement a process like this, as it does with almost everything else that happens in that country. What will be most interesting to watch is how and if it is ever able to play catch-up and issue every citizen an AADHAAR. With a target rate of 10 million cards issued every four months, and a population growth of 4 million new people every quarter, it will be a very tough race to win.
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