Digital foresight gave India its identity leadership

Almost as soon as it was announced, it had to deal with angry opposition from all quarters, raising concerns about the fact that it was going to invade personal privacy and the surveillance that could result in if its database were to be misused.

So widespread was the discomfort with Aadhaar that every time I travelled outside the country, I found myself having to explain why we were building it.

This was particularly the case in Europe, where, in the data protection circles I inhabit, no one had any qualms expressing their disapproval with what we were attempting.

While I could understand how their lived experience during World War II might have made them nervous about any attempt to establish a citizen ID database, what was disappointing was that so much of their concern came from an imperfect understanding of how Aadhaar had been designed.

It has been nearly 15 years since the first Aadhaar number was issued and all the fears that it would lead to mass surveillance have, for the most part, not come to pass. Aadhaar has largely been used to deliver subsidies, provide benefits and ease public access to services.

Not only did the technology not ‘fail at scale,’ as we were warned it might, none of the widespread exclusion we were told would result came to pass. At the time of writing, over 130 billion Aadhaar authentications have taken place, suggesting that, at the very least, the system must have worked 130 billion times.

The digital public infrastructure (DPI) revolution that Aadhaar launched dramatically improved financial inclusion in the country. In 2011, just 35% of the population had bank accounts. Today, almost nine-tenths of our population aged 15-plus has a bank account, even if some accounts go unused.

Direct benefit transfers now reach millions of beneficiaries across 300-plus schemes, and during the covid lockdowns, Aadhaar enabled 11 million daily micro ATM transactions and took banking to India’s remotest villages.

But beyond these numbers, perhaps the greatest vindication of Aadhaar is the fact that once-fierce opponents of the very idea of a digital identity are now implementing it in other countries.

In what is, for me, perhaps the most dramatic turnaround, the EU last May mandated that all its 27 member states should provide digital identity wallets to their 450 million citizens by December 2026.

The eIDAS 2.0 regulation represents one of the most comprehensive digital identity roll-outs in history, with cross-sector interoperability and acceptance by both public and private service providers.

Through its ID4D initiative, the World Bank is investing $1.2 billion in national ID projects across more than 30 countries. Paul Romer, a former World Bank chief economist, once described Aadhaar as “the most sophisticated ID programme in the world” and argued “it could be good for the world if this became widely adopted.”

Across the world, 26 countries have implemented identity systems using the MOSIP platform, and over 130 million digital IDs have already been issued globally. The Philippines alone has registered 90 million citizens, while Ethiopia intends to reach 70 million residents through its Fayda ID system.

Today, it is widely accepted that a digital identity is essential in an increasingly digital world. Countries without such ID systems risk being left behind, as they would be unable to deliver services efficiently and facilitate the digital transactions that modern economies need.

This was clearly evident during the pandemic, when countries with robust digital identity infrastructure could respond three times more effectively than those that had to rely on paper-based systems.

As for the debate about privacy being traded off for utility, most countries have voted in favour of the latter, realizing that a robust digital ID system does more to enhance democratic governance than threaten it.

According to McKinsey, a digital ID can unlock economic value of up to 4% of a country’s GDP by reducing identity fraud and streamlining everything from banking to healthcare access.

Today, the question is no longer whether a digital ID programme is necessary, but how quickly the country in question can implement it.

The case for one is overwhelming: nations with strong digital ID systems can deliver services more efficiently, respond to crises more effectively and enable financial inclusion.

Those without will increasingly find themselves unable to offer their citizens the level and variety of services expected of a modern economy.

In under a decade-and-a-half, things have come full circle. Countries that were once critical of India’s digital identity system are now implementing identity systems of their own. Its opponents have largely fallen silent, as the dystopia they had predicted would inevitably befall us has not materialized.

To be clear, I am not doubting their motivations or questioning their intent, but just pointing out that they failed to appreciate how rapidly the world was digitizing and how essential a digital identity was going to prove in the future that was to come.

Ice hockey legend Wayne Gretzky, famously said, “I skate to where the puck is going to be, not where it has been.” India saw where the future was going to be. And built accordingly. The rest of the world is now following suit.