From UPSC perspective, the following things are important :
Prelims level : Not much.
Mains level : Paper 2- Aadhaar- how it has fared so far?
Aadhaar-based biometric authentication did not reduce PDS leakages, finds Jharkhand-based empirical study
What was the rationale behind Aadhaar?
- What did the UIDAI’s report say? Aadhaar has curtailed leakages of government subsidies. Through Aadhaar, savings worth ₹90,000 crores have accrued to the government– UIDAI’s2017-18 annual report.
- Plugging the leakages in the schemes: When Aadhaar was conceived a decade ago, the rationale postulated was: India spends nearly three trillion rupees a year across several core welfare programmes such as Public Distribution System (PDS), LPG, Mahatma Gandhi National Rural Employment Guarantee Act etc.
- Huge leakage due to duplications: Roughly 30-40% of this three trillion is lost in leakages.
- Leakages are largely due to ‘ghost’ and ‘duplicate’ beneficiaries using fake identities to avail these benefits; a unique identity biometric scheme can eliminate these leakages and vastly improve efficiency in welfare delivery.
- Improve welfare delivery efficiency: In fact, the former Union Minister, Arun Jaitley, even renamed the Aadhaar Bill to ‘Targeted Delivery of Financial and other Subsidies, Benefits and Services’ Bill, making it amply clear that Aadhaar’s primary, if not sole purpose, was to improve welfare delivery efficiency.
What are the findings of study?
- How was the study carried out?
- Use of RCT and sample of 15 million people: They conducted a scientifically designed study of the PDS system in Jharkhand covering 15 million beneficiaries using the technique of randomised control trials (RCT).
- In the study, one set of beneficiaries went through the Aadhaar-based biometric authentication while the other group used the old system of procuring their ration.
- The results were then compared to see if Aadhaar-based biometric authentication had any impact in reducing leakages.
- What were the findings of the study?
- No measurable benefit: The study concluded that Aadhaar-based biometric authentication had no measurable benefit.
- No reduction in leakages: Aadhaar-based biometric authentication did not reduce leakages due to elimination of ghosts and duplicates, as widely perceived.
- Increase in transaction costs for beneficiary: On the other hand, they found that Aadhaar-based biometric authentication increased transaction costs for beneficiaries.
- 17% extra cost: That is, to claim ration worth ₹40, beneficiaries in the Aadhaar system incurred an additional ₹7 of costs than those in the old system, because of multiple trips to authenticate themselves and the opportunity cost of time spent.
- This is a whopping 17% extra cost burden of the value of the benefit they were entitled to receive.
- Type 1 error of exclusion: To make matters worse, Aadhaar-based biometric authentication also introduced what empirical scientists call Type I error of exclusion.
- Aadhaar authentication falsely rejected genuine PDS beneficiaries who were then denied their ration supplies.
- The study finds that nearly 10% of legitimate beneficiaries were denied their ration either because they did not have their Aadhaar linked to their ration card or due to an exclusion error.
- Summary of the finding: In summary, the study states that there was-
- No direct impact of Aadhaar in reducing leakages.
- 2. It denied ration to 10% of genuine beneficiaries and increased costs by 17% to those that were forced to get their ration using Aadhaar.
- Pain with no gain: They conclude that Aadhaar authentication for PDS in Jharkhand caused “some pain with no gain”.
What premises were wrong about Addhaar?
- No testing of empirical belief: There was a widespread belief among the policy elite that ghosts and duplicates were the scourge of India’s welfare delivery and that Aadhaar would eliminate this.
- But this belief was never empirically tested.
- Based on this belief, an entire story was concocted about improving welfare efficiency by eliminating ghosts and duplicates with Aadhaar and a whole new law was enacted to this effect.
- The pilot project not carried out: Many studies now establish that ghosts and duplicates are not the significant cause of leakages.
- It would have been better to have undertaken a robust pilot project of scale to test the belief about ghosts and duplicates, before embarking on it nationwide.
In a sociologist’s world and in a liberal society, a policy that could run the risk of denying welfare to just a few people, putting their lives at risk, is not worth implementing regardless of how many millions it benefits.