Aadhaar unreliable in ‘hot, humid’ India: Moody’s

Source: The post is based on the article “Aadhaar unreliable in ‘hot, humid’ India: Moody’s”  published in The Hindu on 25th September 2023

What is the News?

Global rating major Moody’s Investors Service has released a report titled “Decentralized Finance and Digital Assets”.

What are the key findings of the report?

Source: The Hindu

Moody has acknowledged Aadhaar as the world’s largest digital ID program that assigns unique numbers to over 1.2 billion Indian residents using biometric and demographic data.

However, Moody has raised some concerns over Aadhar such as:

Biometric issues: Aadhar often results in service denials and the reliability of biometric technologies especially for manual laborers in hot, humid climates, is questionable.

– These remarks assume significance in view of the government’s adoption of Aadhaar for routing direct benefit transfers to beneficiaries of official welfare schemes and in particular, the use of Aadhaar-based payments for labourers under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme.

Centralized Identification system: Aadhaar is a centralized identification system.This leads to the concentration of sensitive information with specific entities and increases the risks of data breaches.Hence, that’s why Moody has favoured adoption of decentralized ID (DID) systems.

– In decentralized ID (DID) systems, personal data is saved in a user’s digital wallet and identity verification takes place not via a single, centralized institution but on a decentralized digital ledger such as a blockchain.This increases privacy and reduces the amount of personal information held by intermediaries.

– For instance, Estonia, known for its fully digitalized public services has embraced SSI [Self-Sovereign Identity] to grant citizens complete control over their digital identities.

– However, digital IDs, centralized or not can have negative social repercussions, since they may strengthen group identities and political divides, particularly if offered by technology and social media companies with significant monopolistic influence.