Aadhaar-Based Digital Payments Are Fine, But Will Privacy Become a Casualty?

Last week a picture of a Bank of India cheque leaf with blank boxes for putting down the Aadhaar number of the recipient started doing the rounds of the social media. Then the Deccan Chronicle and India 24X7 news channel ran news items on this, which was picked up by Business Standard as well.

Why would something as bizarre as this actually make it to the news? Because anything seems possible the way the government is pushing Aadhaar (though it still doesn’t justify the journalists who wrote about it not checking with the Bank of India).

Around the time a photograph of this so-called cheque started to go viral, there were media reports of the chief executive officer of NITI Aayog, Amitabh Kant and the chief executive officer of the Unique Identity Authority of India (UIDAI) briefing journalists on the government push for Aadhaar-based digital payments.

Aadhaar was supposed to be a harmless but path-breaking exercise to provide beneficiaries of welfare programmes with a unique identity document and prevent diversion and leakage of benefits. How, when and why did it become an authentication tool for digital payments? Has the thought that this can seriously compromise privacy cross anyone’s mind? Or is privacy supposed to be a minor casualty in the move to a more efficient economy that digital payments are supposed to bring in their wake?

This slow march of Aadhaar has gone unnoticed. When Aadhaar enrolments started, the form had a column about linking one’s bank account with the Aadhaar number and asking if this could be shared. It was optional, but those doing the enrolment never pointed this out. Only people who knew about it exercised the option; others missed it.

Then banks started telling customers to seed their accounts with their Aadhaar numbers. The big push came when direct payment of LPG subsidy started; this could not be done without an Aadhaar-linked bank account. But the seeding of Aadhaar was not limited to the bank account in which the subsidy amount was to be paid. Every bank is asking its customers to link their accounts with their Aadhaar number.

Aadhaar has also got linked with PAN and voter ID cards. In both cases, people were led to believe it was mandatory with the relevant departments later clarifying that it was not. But now people are being tempted to provide their Aadhaar numbers in order to get faster service. So quicker tax refunds and speedier verification of returns are promised to those who link Aadhaar with their PAN. The passport office promises faster processing of applications that are accompanied by the Aadhaar card.

Quoting of Aadhaar to avail of senior citizen discount for railway bookings will be mandatory from April 1, 2017 (it will be voluntary from January to March). There have been media reports about Aadhaar being mandatory for all railway ticket bookings, but there is no final decision on this.

Worse, even the private sector is now resorting to mandatory quoting of Aadhaar. It is not possible to get a Reliance Jio connection without an Aadhaar card. Other telecom companies don’t insist on Aadhaar but, taking a leaf out of the government’s book, offer the temptation of activation of sim in less than an hour if the Aadhaar number is given. This option is given only to people who decline to share their Aadhaar details; others are allowed to believe this is mandatory.

If the statute giving legal status to Aadhar is called Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, what was the need for the provision allowing private companies to ask for Aadhaar as identity proof? A question lawyer J. Saideepak puts begs an answer: “is the private sector being co-opted to understand my movements?”

What’s all the fuss about?

Because the quoting of Aadhaar across transactions and activities enables discrete bits of information about an individual, which till now existed in fairly watertight silos, to be linked up.

Even without Aadhaar, the increasing digitization of information was causing concern. “The extent of personal information being held by various service providers, and especially the enhanced potential for convergence that digitization carries with it is a matter that raises issues about privacy,’ the report of a Group of Experts on Privacy headed by Justice A.P. Shah said in 2012. Bringing in Aadhaar for various services and transactions increases this threat manifold.

Ardent advocates of Aadhaar have always laughed off privacy concerns - biometric data is not shared, UIDAI only confirms or rejects the bio-metrics of a person sent to it, the bio-metric information is stored with unprecedented levels of security, the only other personal information that the UIDAI has is name, date of birth and address.

But privacy concerns are not about sharing of bio-metric or personal information alone – it is about the ubiquity of Aadhaar providing a worrying scope for convergence of data. Does one really need Aadhaar for all the activities it is being sought for? Will other documents – voter I-card, passport, driving licence, PAN – not serve the purpose?

There is certainly a case for making Aadhaar mandatory for welfare benefits (this writer has consistently argued that this is for now the best way to eliminate leakage) and even for passports and driving licences.

But beyond that, its use has to be extremely sparing, especially in the case of financial transactions. Digital payments leave a trace anyway; why increase the points of vulnerability by linking them to Aadhaar? If digital payment is a means to check tax evasion, there are other provisions already in place – purchases above a certain amount require PAN to be quoted, credit card transactions above a certain limit are automatically captured by the tax department’s Annual Information Return (AIR) of high value transactions.

Aadhaar-based digital payments will be justified on the grounds of ensuring more secure transactions. But the likely breach of privacy may be too high a price to pay for this.

Any mention of privacy concerns get two standard rebuttals.

One, this is needed for security agencies to keep track of criminal activities, criminals and terrorists. Valid point. But how strict are protocols governing such monitoring? The apprehension that rogue officers could go on random fishing expeditions that lead to harassment of ordinary individuals is not a far-fetched one.

Besides, with the extensive use of Aadhaar, a whole range of private and government agencies – who have nothing at all to do with security - now will have access to one’s Aadhaar number. Data confidentiality breaches are quite common and it could become possible for an enterprising hacker to get diverse bits of information about an individual using his or her Aadhaar number.

The second rebuttal of privacy concerns is, if you are not doing anything wrong and don’t have anything to hide, you need not worry. But privacy is not just about hiding something unsavoury; it is about individual choice about what personal information to put in the public domain.

Let us not forget that all this is happening in the absence of an eco-system that protects privacy. After a failed attempt by the United Progressive Alliance government, there has been no movement on a privacy law. Hearing a bunch of petitions challenging the Aadhar scheme, the Supreme Court referred the issue of right to privacy to a larger Constitution bench in August 2015. There has been no movement on this. Worryingly, while arguing those cases, the attorney-general Mukul Rohatgi blithely said that there was no fundamental right to privacy.

Privacy concerns are also dismissed as an elitist and urban concept, something the poor and people in rural areas do not understand. But this is also an elitist argument. Has anyone asked the poor and people in villages if they are comfortable with all their activities being known to others? When it comes to financial matters, everyone values privacy.

It could well be argued that people need not opt for digital payments which involve use of Aadhaar. But when the government is aggressively pushing the idea, holding out tantalising benefits of quick and easy payments, discounts and now even lucky draws, it will be natural for people to be lured into something without understanding the unintended consequences. In the news report mentioned earlier, Kant has even talked about plans to disincentivise cash payments. Does this not amount to indirect coercion?

The push for Aadhaar-enabled digital payments and indeed the expansion of the use of Aadhaar without a robust privacy framework in place is something that needs to worry all of us. The government needs to hasten slowly on this and get to work on a privacy law speedily.