Sunday, July 5, 2009

The ID card project: Do the costs and risks justify the benefits?

R. Ramakumar

With the appointment of Nandan Nilekani as the Chairman of the Unique Identification Authority (UIA), the UPA government has taken a clear decision to go ahead with the controversial project to provide each Indian citizen with a unique and multi-purpose identity card. The print and visual media is buzz with commentators praising the government for a landmark decision that would “change the face of governance” in India. With contracts worth hundreds of crores up for grab, the Indian IT industry too is in delight. “Bring them on! We will fix it,” India’s tech industry appears to be claiming on what is essentially a social problem.

The project to issue unique ID cards to Indian citizens was initiated by the NDA government under Atal Bihari Vajpayee in 2002. A perusal of the history of this project would show that the dirty ground work for the project had already been completed under the NDA. The origins of the ID card project can be traced back to the controversial report of Kargil Review Committee, appointed in the wake of the Kargil War, in 1999. This Committee was chaired by K Subrahmanyam, and had as its members B. G. Verghese, Satish Chandra and K. K. Hazari. In its report submitted in January 2000, the Subrahmanyam Committee had noted that immediate steps were needed to issue ID Cards to villagers in border districts, pending its extension to other parts of the country.

By around 2001, a Group of Ministers (GoM) of the NDA government submitted a report to the government titled Reforming the National Security System. This report was based largely on the findings of the Subrahmanyam Committee. The report noted that:

Illegal migration has assumed serious proportions. There should be compulsory registration of citizens and non-citizens living in India. This will facilitate preparation of a national register of citizens. All citizens should be given a Multi-purpose National Identity Card (MNIC) and non-citizens should be issued identity cards of a different colour and design.

In 2003, the NDA government initiated a series of steps to ensure the smooth preparation of the national register of citizens, which was to form the basis for the preparation of ID cards. The best way was to link the preparation of this register with the Census of India. However, the Census of India has always had very strong clauses related to the privacy of its respondents. Thus, the Citizenship Act of 1955 was amended in 2003, soon after the MNIC was instituted. This amendment allowed for the creation of a post of Director of Citizen Registration, who was also to function as the Director of Census in each State. According to the citizenship rules notified on 10 December 2003, the onus for registration was placed on the citizen himself: “it shall be compulsory for every Citizen of India to…get himself registered in the Local Register of Indian Citizens.” The rules also specified punishments for citizens who fail to do so; any violation was to be “punishable with fine, which may extend to one thousand rupees.”

In other words, the privacy clauses in Census surveys were diluted significantly by the NDA government in 2003 itself.

The UPA government has only carried forward the plans of the NDA government under a new name. The MNIC project was replaced by the National Authority for Unique Identity (NAUID), and placed under the Planning Commission. The NAUID was established in January 2009, soon after the terrorist attacks on Mumbai in November 2008. However, the steps to establish the NAUID had begun even before the Mumbai attacks. According to a press release of the government dated 10 November 2008, the Unique Identity Project (UID) would serve a variety of purposes: “better targeting of government’s development schemes, regulatory purposes (including taxation and licensing), security purposes, banking and financial sector activities, etc.” According to the government, the UID will be “progressively extended to various government programmes and regulatory agencies, as well as private sector agencies in the banking, financial services, mobile telephony and other such areas.” As per the interim budget of the UPA government in February 2009, the Unique Identification Authority of India was established, of which Nandan Nilekani has now been appointed Chairman.

The public response to the ID project in India has been influenced by the liberal praise the media has showered on it. In fact, the nature of reporting of the media would have one in doubt on whether the praise is for the project per se or for the appointment of the Chairman. Some commentators have hailed Nilekani’s appointment as a first step in the absorption of technocrats into government. It has also been argued that ID cards would increase the efficiency of poverty alleviation programmes. In fact, while better delivery of poverty alleviation programmes is the stated primary objective of the project, it is no one’s doubt that the actual primary objective is to address terrorism.

Indeed, the presence of identity cards for citizens in an electronic format is a welcome measure. In specific sectors/schemes and in specific contexts, it can increase the efficiency of service delivery. At the same time, there are a number of reasons why the UIA project has to be thoroughly critiqued, and even opposed.

First, international experience shows that very few countries have provided national ID cards to citizens. The most important reason has been the unsettled debate on the protection of privacy and civil liberties. It has been argued that the data collected as part of providing ID cards, and the information stored in the cards, may be misused for a variety of purposes. For instance, there is the problem of “functionality creep” where the card can serve purposes other than its original intent. Some have argued that ID cards can be used to profile citizens in a country and initiate a process of racial/ethnic cleansing, as during the Rwanda genocide of 1995. Legislations on privacy cannot be guarantees against the possibilities of misuse of ID cards.

Two countries where the issue of national ID cards has been well debated are the US and the UK. In both these countries, the project has been shelved after public protests. Apart from the US and UK, countries like Australia have also shelved ID card schemes. While China declared its intention to introduce an ID card, it later stepped back and withdrew the clause to have biometric data stored in such cards.

In the US, privacy groups have long opposed ID cards; there was opposition also when the government tried to expand the use of the social security number in the 1970s and 1980s. The disclosure of the social security number to private agencies had to be stopped in 1989 after public outcry. A health security card project proposed by Bill Clinton was set aside even after the government promised “full protection for privacy and confidentiality.” Finally, the Bush administration settled in 2005 for an indirect method of providing ID cards to US citizens. In what came to be called as a “de-facto ID system”, the REAL ID Act made it mandatory for all US citizens to get their drivers’ licenses re-issued, replacing old licenses. In the application form for re-issue, the Department of Homeland Security added new questions that became part of the database on driving license holders. As almost all citizens of US had a driving license, this became an informal electronic database of citizens. Nevertheless, these cards cannot be used in the US for any other requirement, such as in banks or airlines. The debate on the confidentiality of the data collected by the US government continues to be live even today.

The most interesting debate on the issue of national ID cards has been in the United Kingdom. With the introduction of the Identity Cards Bill of 2004, the Tony Blair government declared its intent to issue ID cards for all UK citizens. Public protests have forced the Labour government to shelve the policy till date. The debate in UK has mainly centred around the critical arguments in an important research report on the desirability of national ID cards prepared by the Information Systems and Innovations Group at the London School of Economics (LSE). The LSE’s report is worth reviewing here.

The LSE report identified key areas of concern with the Blair government’s plans, which included their high risk and likely high cost, as well as technological and human rights issues. The report noted that the government’s proposals “are too complex, technically unsafe, overly prescriptive and lack a foundation of public trust and confidence.” While accepting that preventing terrorism is the legitimate role of the state, the report expressed doubts on whether ID cards would prevent terror attacks through identity theft:

…preventing identity theft may be better addressed by giving individuals greater control over the disclosure of their own personal information, while prevention of terrorism may be more effectively managed through strengthened border patrols and increased presence at borders, or allocating adequate resources for conventional police intelligence work… A card system such as the one proposed in the Bill may even lead to a greater incidence of identity fraud… In consequence, the National Identity Register may itself pose a far larger risk to the safety and security of UK citizens than any of the problems that it is intended to address.

In conclusion, the LSE report noted that

…identity systems may create a range of new and unforeseen problems. These include the failure of systems, unforeseen financial costs, increased security threats and unacceptable imposition on citizens. The success of a national identity system depends on a sensitive, cautious and cooperative approach involving all key stakeholder groups including an independent and rolling risk assessment and a regular review of management practices. We are not confident that these conditions have been satisfied in the development of the Identity Cards Bill. The risk of failure in the current proposals is therefore magnified to the point where the scheme should be regarded as a potential danger to the public interest and to the legal rights of individuals.

Secondly, an interesting aspect of the discussion in India is the level of technological determinism on display. It would appear that the problem of citizenship can be fixed by the use of technology. The fact that the UIA is to be headed by a technocrat like Nilekani, and not a demographer, is evidence to this biased view of the government. The problems of enumeration in a society like India’s, marked by illegal immigration as well as internal migration, especially of people from poor labour households, are too enormous to be handled effectively by a technocrat. It is intriguing that the duties of the Census Registrar and the UIA Chairman have been demarcated, and that the UIA Chairman has been placed as a Cabinet Minister above the Census Registrar.

Such technological determinism has been a feature of efforts to introduce ID cards in other countries too, such as the UK. The rhetorical confidence of the UK government in the scheme has always sat uncomfortably with its own technological uncertainty regarding the project. Critics pointed out that a slight failure in any of the technological components may immediately affect underlying confidence of people in the scheme as a whole. For instance, the LSE report noted that:

The technology envisioned for this scheme is, to a large extent, untested and unreliable. No scheme on this scale has been undertaken anywhere in the world. Smaller and less ambitious systems have encountered substantial technological and operational problems that are likely to be amplified in a large-scale, national system. The proposed system unnecessarily introduces, at a national level, a new tier of technological and organisational infrastructure that will carry associated risks of failure. A fully integrated national system of this complexity and importance will be technologically precarious and could itself become a target for attacks by terrorists or others.

Tony Blair, nevertheless, was an ardent advocate of the ID card scheme. In an article written in The Daily Telegraph, he argued that ID cards are required to secure UK’s borders and ease modern life, and that “the case for ID cards is a case not about liberty but about the modern world.” Responding to the invocation of modernity, Edgar A. Whitley, Reader at LSE and a member of its research team, noted that “intellectually, technological determinism seemed to us to reduce the intimate intertwining of society and technology to a simple cause-and-effect sequence.”

Thirdly, would the ID card scheme result in an increase in the efficiency of government’s poverty alleviation schemes? According to Nilekani, the ID card “will help address the widespread embezzlement that affects subsidies and poverty alleviation programmes.” However, it is difficult to foresee any major shift in the efficiency frontiers of poverty alleviation programmes if ID cards are introduced. The poor efficiency of government schemes in India is not due to the absence of technological monitoring. The reasons are structural, and these structural barriers cannot be transcended by using ID cards.

Take one claim – unique ID cards would lead to “better targeting of government’s development schemes.” Here is where the thinking behind the ID cards fails to comprehend the social realities that reduce the access of needy sections to welfare schemes. If we apply the argument to the Public Distribution System (PDS), it would imply that the government could ensure that only BPL households benefit from the scheme. But the most important problem with the PDS in India is not that non-BPL households benefit, but that large sections are not classified as BPL in the first place. Further, there are major problems associated with having a classification of households as BPL or APL based on a survey conducted in one year, and then following the same classification for many years. Incomes of rural households, especially rural labour households, fluctuate considerably. A household may be non-poor in the year of survey, but may become poor the next year due to uncertainties in the labour market. How would an ID card solve this most important barrier to efficiency in the PDS?

Yet another claim is that a simple cash-transfer scheme would become possible if ID cards are introduced, which could replace the existing poverty alleviation programmes. To begin with, cash-transfer schemes have not been found to be efficient substitutes for public works schemes in any part of the developing world. In addition, for the same reasons discussed in the context of the PDS, a cash-transfer scheme would also lead to the exclusion of a large number of needy from cash benefits. An ID card cannot be of any help in such scenarios.

Also, the case of BPL cards cited above cannot be considered as a special case. Given that the BPL population has special privileges in many social welfare provisions, this would also be a larger and persistent problem in the use of ID cards for any purpose in the social sector.

Fourthly, the costs involved in such a project are always enormous and have to be weighed against the limited benefits that are likely to follow. In India, the cost estimated by the government itself is a whopping Rs 1.5 lakh crore. Even after the commitment of such levels of expenditures, the uncertainty over the technological options and ultimate viability of the scheme remains. In addition, it is unclear whether recurring costs for maintaining a networked system necessary for ID cards to function effectively have been accounted for by the government.

In the case of UK, the LSE report had noted that the costs of the scheme were significantly underestimated by the UK government. The critique of the LSE group on the costing exercise of the UK government is a good case study of why the costs of such schemes are typically underestimated. The LSE group estimated that the costs would lie between £10.6 billion and £19.2 billion, excluding public or private sector integration costs. This was considerably higher than the estimate of the UK government.

Apart from the reasons discussed above, there are other simple questions for which the answers are not so easily forthcoming. Suppose a poor household, which has been regularly using the ID card, loses the card. Would that mean that all the benefits the household would cease till a new card is provided (that is surely to take many weeks in the Indian context)? Why cannot we think of other options, such as providing separate electronic cards some of the very important schemes? What happens to the use of ID cards in villages that do not even have electricity, leave alone internet connections?

In conclusion, the ID card project of the UPA government, which is the continuation of a hawkish idea of the NDA, appears to be missing the grade on most criteria. There is no reason to disbelieve that argument that the centralized database of citizens could be misused to profile citizens in undesirable and dangerous ways. The scheme is extraordinarily expensive. There is an unrealistic assumption behind the project that technology can be used to fix the ills of social inefficiencies. The benefits from the project, in terms of raising the efficiency of government schemes, appear to be limited.

This is not to argue against any form of electronic management of data or provision of services. It may certainly be useful to have an identity card for citizens, which can be made use of in any part of the country for identification as well as availing certain minimum benefits. At present, roughly 80 per cent of India’s citizens have an election ID card. The use of this election ID card can be easily expanded, with some innovation, to convert it into a master card for a specified set of purposes. But what is the social benefit of centralizing all information and access to welfare schemes into one smart card? Unfortunately, the UPA government has skipped public debate around criticisms and alternative suggestions.

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