Aadhar unreliable in hot humid India: rating agency

Amid India's Digital infra push, Moody's say the world's largest digital ID p0rogramme often denies service to users: it questions reliability of biometric technology, warns of privacy and security risks.

Global rating major Moody's Investors Service has flagged concerns about security and privacy vulnerabilities in centralised identification system such as India;s Aadhar programme. The unique ID system often results in "service denials" and using biometric technologies in humid conditions is unreliable, it noted.

The Aadhar System enables access to public and private sectors, with verification through fingerprint or iris scans and alternatives such as one-time password (OTP). However, it "faces hurdles including the burden of establishing authorisation and concerns about biometric reliability" Moody's said. 

"The Unique Identification Authority of India (UIDAI) administers Aadhar aiming to integrate marginalised groups and expand welfare benefit access. The system often results in service details, and the reliability of biometric technologies, especially for manual labourers in hot, humid climates, is questionable," it stressed.

The rating agency;s remarks assume significance in view of the government's adoption of Aadhar for routing direct benefit transfers to beneficiaries of official welfare schemes and in particular, the diktat to mandate Aadhar based payments for labourers under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

Last month, the Government extended its deadline for switching to a Aadhar Based Payment System (ABPS) for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) beneficiaries for the fifth time, pushing it to Dec-31-2023.

In a report on "Decentralised finance and digital assets" issued on Saturday, Monday's acknowledged Aadhar as the world's largest digital ID program" that assigns unique numbers to over 1.2 billion Indian residents.

The rating agency served Aadhar, and a new crypto-based digital identity token called Worldline, as two digital systems.in the world that stand out due to their scale and extent of innovatgion. However, Moody's also said that they have "drawn scrutiny" Stressing tha ID systems like Aadhar lead to the concentration of sensitive information with specific entitles such as digital wallets based on blockchain capabilities that give users more control of their private data and can reduce online fraud.

Decentralised systems

"In recent years, the spotlight has shifted towards a strategic response to the security and privacy vulnerabilities posed by centralised ID systems like Aadhar," the agency noted citing successful programs in Catalonia, Azerbaijan and Estonia that have used blockchain based systems to issue digital identities.

"Estonia, known for its fully digitalised public services, has embraced Self Sovereign Identity (SSI) to grant citizens complete control over their digital identities," it pointed out.

"In a centralised system, a single entity such as a bank, social media platform or government electoral roll controls and manages a user identifying credentials and their access to online resources. That entry can dispose of the users identity data - name, address and Social Security Number, for example for internal or third party profiling purposes" the report averred, stating that such systems offer the least personal data to users.