The government has decided to go ahead with the Unique Identification Card Project and entrusted it to Mr. Nandan Nilekani of Infosys fame. The idea is to create an identification number for every citizen, buttressed with a smart card that allows governments, banks and other institutions to interact directly with every citizen.

Mr. Nilekani will be following in the footsteps of Mr. Sam Pitroda who returned to India to develop a modern digital switching system for India’s phone-starved rural areas in the eighties and Dr. M S Swaminathan who contributed to the Green Revolution.

The challenge before Mr. Nilekani is no less onerous. Providing all Indian citizens with a permanent ID card carrying a unique number, a photograph and biometric data is a tall order. The need for such an identity card has long been felt. At present, people can have a multitude of cards with which to identify themselves such as PAN, passport, ration card and so on.

All suffer from a double disability: cards are issued to non-eligible or non-existent persons while deserving people do not get them, especially the poor and illiterate. The lack of a unique identification number has led to bank accounts with multiple PANs and ghost cards in voter lists, below-poverty-line (BPL) schemes etc.

More importantly, in the absence of such a card it has been possible for foreign nationals such as Bangladeshis and Pakistanis to illegally migrate to our country and acquire ration cards or voting cards etc. Some of these foreigners have been found involved in nefarious activities, including terrorism.
  

A national database with each citizen having a unique identification number can help overcome the problem of illegal immigration and significantly help in combating terrorism. The database will allow the number of people living below the poverty line to be easily identified, thus ensuring proper targeting of the benefits under welfare schemes. Further, people will be able to use this card for numerous purposes such as voting, as proof for opening a bank account and as a general multi-purpose identity card.

The multi-purpose national identification card (MNIC) thus promises to not only address national security concerns, but to lend a helping hand in welfare delivery, improve tax collections, facilitate greater financial inclusion, and aid voter registration.

On the other hand, there are daunting challenges: technical, administrative and political. The experience of other countries is not very encouraging. In many democracies, there is significant opposition to the idea of such a card, because of privacy and civil liberties concerns. Few countries outside Europe have such a card system. The US is by law prevented from issuing a national ID card. Australia and some Asian countries gave up the idea after adopting it.

China has now begun to proceed with it, but has given up the idea of incorporating biometric systems. Britain decided in 2005 to issue all citizens a unique ID card. Four years later, the first cards to ordinary citizens are yet to be issued, and this will not be done for another couple of years. With 50 million citizens to be covered, the cost is forbidding, said to be over five billion pounds.

But cost-effective technical expertise is the easiest of the problems. Indian IT companies have been offering IT-enabled services to rest of the world and thereby increasing their competitive advantages. They can probably work out a card-issuing system that is truly low-cost. But there will be a trade-off between cost and utility: the more data you store on the card the greater its usefulness, but the higher its cost.

As Mr. Nilekani himself says in “Imagining India”, “building these intelligent little stripes is the easy part. It is in making the back-end infrastructure secure and scalable, providing a single record keeper for the whole country and integrating the agents who issue these numbers that it gets tough...” Technology and expertise will be required on the part of those who process MNICs. Otherwise, how can any government agency detect counterfeit cards?

A more intractable challenge would be administrative and organizational. The bureaucracy that will issue and use these cards is unaccountable and unsackable. It works under perverse incentives. Government servants do not get rewarded for satisfying citizens, officials who extort suffer no penalty, and get promoted in cahoots with corrupt netas. The system is quite smart, but it has no interest in serving the public.

The objectives such as national security and prevention of frauds are served only if the card-issuing process is foolproof, whereas many people’s experience with something as simple as the election card is less than satisfactory. As a rule, in a government office nothing is possible without a bribe and everything is possible with a bribe. The bribe need not be monetary. The promise, or even a probability of large number of votes, for example, also can act as a powerful incentive for wrongdoing.

Behind the administrative sloth often lie political calculations. Can we seriously expect MNICs being used to weed out Bangladeshi infiltrators? In all probability, Bangladeshi and Pakistani infiltrators will receive these cards long before bona fide citizens, delivered free of cost to their slums and shanties by enthusiastic political workers who will bend the administrative machinery for the purpose, while the poor and middle class Hindus will have to bribe the clerk to get their cards.

With an imperfect administration (which put Sania Mirza’s photograph on a BPL card), and the extent of illegal immigration from Bangladesh, not to mention the open border with Nepal, the issue of cards that confirm citizenship can cause nightmares.

Or take the issue of prevention of frauds by eliminating duplication of cards. Welfare schemes are powerful tools of patronage and corruption. Will the political leaders agree to identify poor and target subsidies only to them? Certainly not, considering the wish-list floating around for Right to Food.

The government has issued 223 million ration cards, although India has only 200 million households. It has issued 80 million BPL (below poverty line) ration cards although the number of poor households is under 65 million. Will officers who have paid huge sums to get ‘lucrative’ posts use smart cards to undercut patronage networks? Contractors in every state are big financiers of political parties. Will chief ministers hurt their own parties by using smart cards to check waste and corruption?

Poor organisation and low technology are only part of the reason for sloth, corruption and inefficiency that characterize governance in our country. The perverse nature of our polity and distorted incentives system for administrators is the real culprit. That cannot be fixed by technocrats.
    

That is why it promises to be a long haul for the country and for Mr. Nilekani. To begin with, he will have to coordinate between ministries of home, labour, rural development and Information technology. Try writing a letter to any one of them. The plus point is that Mr. Nilekani is probably the best man for the job; he has nothing to gain from the system and may quit if the system tries to suck him in. Yet, even Mr. Nilekani should not expect a smooth ride. Pray for his success, but do not bet on it.


The author is Executive Editor, Corporate India, and lives in Mumbai