Moody’s Investors Service Raises Red Flags Against Aadhaar

September 26, 2023

Moody’s Investors Service, a global rating major, has expressed doubts about the reliability of India’s Aadhaar, a 12-digit universal identity system. The concerns revolve around the use of biometric technologies, particularly in hot and humid climates, and the resulting service disruptions. In response, the Indian government has defended Aadhaar’s credibility, emphasizing its position as the world’s most trusted digital ID.

Moody’s Assessment of Aadhaar

Moody’s acknowledges that Aadhaar, the largest digital ID program globally, plays a pivotal role in providing access to public and private services. Verification methods include fingerprint and iris scans, along with alternatives like One-Time Passcodes. Aadhaar aims to integrate marginalized groups and enhance access to welfare benefits. However, Moody’s highlights challenges related to authentication and biometric reliability.

The Government’s Rebuttal

The Indian government has countered Moody’s assertions, noting the lack of supporting evidence or research in their claims. The government emphasizes that biometric submission can occur through contactless methods such as face and iris authentication. Additionally, it refutes concerns about security and privacy vulnerabilities within the central Aadhaar system, citing Parliament’s assurance of no reported breaches.

International Recognition and Support

Aadhaar has endorsements from organizations like the International Monetary Fund (IMF) and the World Bank. Several nations have expressed interest in adopting similar digital ID systems, indicating Aadhaar’s global influence.

Implications of Reliability Concerns

The reliability concerns surrounding Aadhaar are significant, given its status as the primary identity document for accessing government welfare schemes. If the technology proves unreliable, individuals may face difficulties accessing entitled government subsidies. This situation disproportionately affects those who rely on subsidies the most.

Impact on Welfare Schemes

Aadhaar is linked to numerous government welfare programs, including ration cards, LPG subsidies, and PM Kisan Yojna. For example, millions of Indians have connected Aadhaar to their ration cards to access essential food through the Public Distribution System. Any unreliability in Aadhaar verification could disrupt these vital services.

Real-World Consequences

Instances of starvation deaths in Jharkhand have been linked to Aadhaar biometrics not functioning correctly, preventing individuals from receiving rations through the Public Distribution System.

Ongoing Concerns with Aadhaar

Over the years, Aadhaar has faced recurring concerns related to privacy and reliability. The Comptroller and Auditor General (CAG) of India previously criticized Aadhaar for issues like data-matching, authentication errors, and inadequate data archiving. The absence of a system to analyze authentication errors and a lack of data archiving policy have also been noted.

CAG’s Findings

The CAG’s report highlighted instances where the data of Aadhaar cardholders remained unmatched with their Aadhaar numbers, even after a decade. It also raised concerns about the absence of a data archiving policy, a critical practice in storage management. Additionally, the CAG noted that UIDAI had provided authentication services free of charge, contrary to regulations, which impacted government revenue.

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