Call Us Now

+91 9606900005 / 04

For Enquiry

Issues Surrounding Aadhaar in India


A recent Moody’s report on “Decentralized Finance and Digital Assets” highlights concerns about India’s large-scale digital identification program, noting that it frequently denies services to users. The report questions the reliability of biometric technology and raises privacy and security risks as well.


GS II: Polity and Governance

Dimensions of the Article:

  1. Key Highlights of Moody’s Report on Digital Identification Systems
  2. Government’s Response to Moody’s Report
  3. Challenges Associated with Decentralized ID Systems
  4. Aadhaar

Key Highlights of Moody’s Report on Digital Identification Systems:

Aadhaar and Worldline: Leading but Scrutinized Systems
  • Aadhaar and Worldline recognized as prominent digital ID systems in terms of scale and innovation.
  • Both systems have drawn scrutiny regarding privacy and security concerns.
Concerns About Aadhaar:
  • Aadhaar’s centralized data storage raises the risk of data breaches.
  • Adoption of Aadhaar for welfare program disbursement hampers effective implementation.
  • Biometric hurdles, including authorization and reliability issues, hinder Aadhaar’s effectiveness.
  • Aadhaar allows access to public and private services through fingerprint, iris scans, and OTPs.
  • Administered by UIDAI, Aadhaar aims to enhance welfare access for marginalized groups.
Challenges and Service Denials:
  • Service denials are common in the Aadhaar system.
  • Biometric technology reliability is questionable, particularly in hot, humid climates.
  • Moody’s advocates for decentralized ID systems, like blockchain-based digital wallets, for enhanced privacy control and reduced online fraud risks.

Government’s Response to Moody’s Report:

  • The government highlighted international recognition and praise for Aadhaar from institutions like the IMF and the World Bank. Several countries have also sought to learn from the UIDAI’s Aadhaar system.
  • The government clarified that Aadhaar seeding in the MGNREGS database doesn’t require worker biometric authentication.
  • Payments to workers under the MGNREGS scheme are directly credited to their accounts without biometric authentication.
Decentralized Systems:
  • In a centralized system, a single entity controls and manages a user’s identifying credentials and access to online resources.
  • This managing entity can use the user’s identity data for profiling purposes.
  • Decentralized ID (DID) systems, on the other hand, store personal data in the user’s digital wallet and verify identity on decentralized digital ledgers like blockchains.
  • DID enhances privacy and reduces personal information held by intermediaries.
  • Users manage their identity in portable digital wallets rather than relying on governments or entities.

Challenges Associated with Decentralized ID Systems:

  • Digital IDs, whether centralized or decentralized, can reinforce group identities and political divides, especially if offered by influential tech and social media companies.
  • Concentration of power within these entities could lead to control over individual identities, impacting digital interactions.
  • Such concentration may further polarize group identities and political affiliations, undermining a united and diverse digital space.


  • Aadhaar is a 12-digit individual identification number issued by UIDAI.
  • It serves as proof of identity and address within India.
  • The number is unique for each individual and remains valid for a lifetime.
Usage and Benefits:
  • Aadhaar facilitates access to various services, including banking and mobile phone connections.
  • It is accepted for both government and non-government services.
  • Aadhaar establishes an individual’s identity through demographic and biometric data.
Voluntary Service:
  • Aadhaar is a voluntary service available to all residents, regardless of their existing documentation.
  • It offers a convenient and widely recognized form of identification.

-Source: The Hindu

July 2024