“One cannot improve human beings, but one can certainly improve systems. And the same flawed human beings with a better system will be able to produce better results”

RS Sharma, UIDAI Director

The Indian UID (Unique Identification) is certainly one of the most ambitious governmental projects ever attempted. Under the supervision of the UIDAI (UID Authority of India) created in 2009, it aims at providing a unique 12-digit identification number to the whole Indian population. Started in September 2010 in a few pilot regions, the UID has now been assigned to more than 200 million people. The code is assigned to each individual through one of the several hundreds purposely-built offices throughout the country, and is linked to a central database that records official document scans (passport, driver license, tax file number, ration card) as well as the biometric information that will later be used for secure identification: iris and fingerprint scansions.

The main goal behind the project is to provide a standardized, unique mean of identification that will be accepted by public and private institutions, in order to promote efficiency, safety and fight the widespread corruption and malpractices that hindered India’s significant development in the last few decades. Public offices and private businesses will receive from their customers a UID number combined with an on-the-spot iris and/or fingerprints scans that will be sent to the centralized government database and matched with the files of the resident, thus enabling the companies to access all the client’s necessary information (public and, if permitted, confidential information). As a result, residents would be spared the hassle of repeatedly providing multiple, identity related, documentary proof each time they wish to access services. Therefore, the UID number will provide easy identity verification and facilitate the provision of public or private services. It is also easily verifiable in an online, cost-effective way once the required inputs are entered into the specifically designed software and high quality scanners.  The most innovative feature of this project, and the basis for its reliability, is the inclusion of biometric parameters that ensure identity authentication. In fact, similar code-based projects have been implemented in many countries (Social Security Number in the US, Medical Card of services in Italy, India’s tax “PAN” card among dozens of others) and have often been successful: however, they always required a secondary mean of identification, and this strongly reduced the amount of procedural simplification they managed to achieve.

The UID, instead, will guarantee immediate identification with a scan and a code input. Given that the biometric characteristics recorded, unlike traditional ID documents, are not falsifiable, the probability of identity fraud is almost completely eliminated and the successful identification rate exceeds 99.9%. Additionally, errors that may occur can be checked and processed manually by the system’s employees, further enhancing the efficiency, reliability and security of the project. Nevertheless, several critics have raised doubts over the safety of the system and the critical consequences of a possible misuse of illegally acquired data. These voices of dissent, often coming from regional politicians, are raised in defense of their vested, non-legitimate interests that would be damaged if the UID system would be successfully implemented in all governmental agencies. The most recent ruling on the subject by India’s Supreme Court, on October 21st 2013, backed the legitimacy of the project and dismissed all the charges of privacy violation. Following this logic, the many critics that the UID project raised so far are a very good indicator of its enormous potential in fighting bribery and depriving corrupt officials of their illegitimate powers.

The UID system can be the source of important advantages to all the actors involved in its use. In order to better illustrate these advantages and what is required from the system to deliver them, it is convenient to separate the actors in two main categories: final users (Indian citizens) and institutions (the Indian Government and its agencies; private firms). The crucial point is that each member of a group needs a sizable number of users in the other group in order to maximize its own utility. The more people use UID, the more businesses will benefit from offering UID-based services; vice-versa, more businesses and government agencies accepting UID as identification directly translates into greater benefits for citizens. This twofold relationship is typical in the field of Information Systems (notable similarities explored in class can be found with the videogame and credit card industries) and is a textbook example of the ‘Network Effect’ model. The most important aspect derived from the application of the model to the UID case is the need for both groups of users to reach a Critical Mass in order for the cross–benefits to outweigh implementation costs. In other words, a sizable amount of users in a group (in theory, a precise number of them) must be using the technology to make it convenient for the other group to start using it too. The UID project managers need to acknowledge the importance of this relationship and promote the service to both groups in order to succeed in their ambitious plan. The group-specific benefits are described below, together with an assessment on the network effect externalities and the steps to be taken to reach the critical mass.

Final Users

Indian citizens that choose to apply for a UID will undoubtedly benefit from the technology in many different areas of their life. Firstly, they will obtain easier and legitimate access to welfare programs such as food distribution, direct transfers, fiscal reliefs, medical assistance and so on (recent studies suggest that 2/3 of the allocated aid resources are lost to bribery and illegal appropriation). In fact, even today only a small fraction of the population is able to establish its identity through traditional documentation. According to many Indian officials and researchers, the inability to prove one’s identity is one of the biggest barriers preventing the poor from accessing services and subsidies. Different service providers would require the demander to undergo a full cycle of identity verification, with many forms and documents to be filled out, leading to a high probability of demand rejection in case of noncompliance with the requirements. These situations constantly proved to be a waste of time and resources for both the organizations as well as the individual demanders. Furthermore, India is a country where corruption dominates large areas of government intervention, therefore the UID can significantly improve the effectiveness of the programs by ensuring that the final beneficiaries will receive what they deserve without having to bribe officials or wait too long.

Secondly, those who possess a UID can improve their interactions with private businesses and employers: easier and reliable alternative forms of payment, job applications, contracts, and so on. An interesting development in this direction is the MicroATM: a portable device that can verify one’s identity through UID code input and iris/fingerprint scan, and then wirelessly (thanks to a cellular SIM card) access the bank account of the user in order to perform safe transactions.

Thirdly, the UID can also greatly improve the quality of medical services.  In case that the patient is incapacitated, a simple iris or fingerprint scan would allow the medical staff to directly access all the vital information of the patient (blood type, allergies, medications and so on), therefore limiting errors, increasing the efficiency of the system and potentially providing a database for all medical facilities (including research centers and universities).

Given the importance of these benefits for the average Indian citizen, together with the relative ease of joining the project (UID registration is free), it does not come as a surprise that in just one year more than 200 Million people have chosen to request their new high-tech identification. However, these initial figures are likely to be over-represented by the lower-income classes, since they benefit the most from UID-based food rations. The project now faces the challenge to appeal to mid- and high-income citizens that are less interested in the ease to access welfare programs: the key to success is to reach the critical mass in the number of private businesses offering UID-based services. As of today this is far from being accomplished, as many firms still find the necessary equipment to be too expensive. The government therefore needs to find new ways to promote UID adoption by private firms.


Private and public institutions in India can benefit from the UID mainly in terms of cost savings, increased efficiency, and accuracy of transactions. Moreover, private firms can use UID-based services as a platform for differentiating their offer: consider, for example, mobile phone providers that could include in their plans SMS-based UID services monitoring; travel agents managing visa applications for their customers thanks to the access to the complete set of their customers’ documents; employers being able to track each worker’s activity thanks to daily fingerprint scanning.

In sharp contrast with the group of end users, however, institutions face important costs when deciding to embrace UID in their business: intuitively, the initial expenses to purchase equipment (fingerprint or retina scanners, terminals to access the central UID database); moreover, firms have to deal with ongoing costs related to the management of the new services, such as extra hiring, maintenance costs, and so on. This explains the initial reluctance expressed by private firms and even local public authorities. However, as stated above, the number of institutions using UID is crucial to the success of the technology among citizens: therefore, the government needs to implement further measures to encourage the adoption by firms and state offices. For instance, financing or tax reliefs should be granted to innovative businesses developing cheap connection terminals or biometric readers; public employees should be trained on the technology and motivated to use it; private businesses should receive support for early adoption. This phase is crucial in deciding whether the project will be a universal success or remain confined to those who do not have alternatives (lower income classes); the government needs to address the stated issues, possibly pursuing proactive solutions that can help reaching the critical mass in the near future.



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