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India's Unique Identity (UID) Project Reaching Underprivileged Households That Have No Existing ID

April 24, 2012

Survey led by Professor Ravi Bapna

In September 2010, India's government embarked on a tremendously ambitious project, led by Nandan Nilekani, to issue a biometric-based unique digital identity (UID) to each of its 1.2 billion residents, which would connect hundreds of millions of "excluded" Indians with formal economic institutions. The goal: provide all of the country's people, and not just the minority of advantaged families, with access to banking, mobile services, healthcare and education while streamlining the country's massive welfare programs.

As of mid-April 2012, the government has issued "Aadhaar" numbers to about 170 million Indians. Early survey results from Carlson School of Management Professor Ravi Bapna and NYU Stern Professor Arun Sundararajan, with research support from the Indian School of Business, provide clear evidence that the UID is bringing genuinely underprivileged and excluded households into the country's mainstream economic system for the first time.

Bapna and Sundararajan are leading a project to analyze the state of identity in India and to measure the socioeconomic impact of the UID over the decade through a multi-year, nationwide survey conducted by India's National Council for Applied Economic Research. The first wave of the survey was conducted in 2011, and a second phase is ongoing.

The results from their first phase, which use data from 514,000 households chosen to be representative of the country, show:

State of Identity

  • Fewer than 30% of Indian households have even one resident with any one form of portable ID; those households with portable ID have substantially higher incomes and likelihood of a college-educated resident than those without.
  • The remaining households are forced to rely on documents like ration cards or the government-funded National Rural Employment Guarantee Act (NREGA) cards, which have limited geographic portability and do not easily facilitate inclusion in the socioeconomic system. For example, the rate of illiteracy is four times higher among those without portable ID.

Impact of UID

  • The UID rollout is creating an entirely new segment of "included" residents, those who are attaining portable ID for the first time ever. If enrolments continue according to projections, the professors estimate that this segment will number around 300 million people (25% of the population) by the end of 2012 and continue to grow in 2013.
  • Early UID adopters represent a segment distinct from the 18% of the population that rely on the NREGA program, the government scheme piloted for UID integration. The early adopter profile validates Aadhaar's potential beyond its use for welfare disbursements and suggests considerable promise for early UID-enabled commercial services, in which numerous pioneering corporations (like ICICI and Visa) are investing.
  • Across the states, Andhra, Maharashtra and Karnataka have the highest UID enrollments, with Andhra leading on total inclusion and Karnataka outperforming others on the proportion of early UID adopters who are underprivileged. 

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