The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits, and Services) Act, 2016, commonly known as the Aadhaar Act, is a landmark legislation in India aimed at providing a unique identification number to residents. Enacted to streamline welfare services, the Act has been instrumental in improving transparency, reducing leakages, and ensuring that benefits reach the intended beneficiaries. However, its implementation has sparked debates on privacy, surveillance, and data security.

Background and Need for the Aadhaar Act:
Before Aadhaar, India faced significant challenges in delivering government subsidies and welfare schemes effectively due to:

• Identity fraud and duplication – Many individuals had multiple identities, leading to corruption and leakages.
• Exclusion from welfare benefits – Many marginalised groups lacked valid identification, restricting their access to government schemes.
• Inefficiency in service delivery – Manual verification processes caused delays and inefficiencies in welfare distribution.

To address these challenges, the Unique Identification Authority of India (UIDAI) was established in 2009 under the Planning Commission, and Aadhaar was introduced. However, legal backing was needed to regulate its usage, leading to the enactment of the Aadhaar Act in 2016.

Key Provisions of the Aadhaar Act, 2016

• Objective of the Act: The primary aim of the Aadhaar Act is to provide a unique identity number linked to biometrics and demographic information to enable efficient and transparent delivery of subsidies and services.
• Eligibility for Aadhaar:
  • Any resident of India (who has resided in India for 182 days in the past 12 months) is eligible for Aadhaar.
  • It is voluntary in nature, except for certain government services where Aadhaar authentication is mandatory.
• Unique Identification Number (UID):
  • Aadhaar is a 12-digit unique identity number issued by UIDAI.
  • It is linked to an individual's biometric (fingerprints, iris scan, photograph) and demographic data.
• Authentication Process:
  • The Aadhaar system authenticates an individual's identity using biometric or OTP-based verification to prevent fraud in government schemes.
  • Authentication is required for government subsidies, banking services, mobile connections, and other essential services.
• Protection and Security of Data:
  • The Act mandates UIDAI to ensure secure storage and protection of biometric and demographic data.
  • The data cannot be shared with third parties without the user's consent, except under certain conditions like national security.
• Usage of Aadhaar for Government Services:
  • Aadhaar is used for the direct benefit transfer (DBT) of subsidies, ensuring that financial aid reaches the rightful beneficiary.
  • It is linked to ration cards, LPG subsidies, MNREGA wages, pensions, scholarships, and other government schemes.
• Offences and Penalties:
  • Unauthorized access, impersonation, or misuse of Aadhaar data is a punishable offense under the Act.
  • Penalties include fines and imprisonment for violations related to data security and fraud.
     

Impact of Aadhaar on Governance and Welfare

• Enhancing Transparency and Efficiency:
  • Aadhaar has helped eliminate fake and duplicate beneficiaries from government schemes.
  • The Direct Benefit Transfer (DBT) system, linked to Aadhaar, has significantly reduced leakages in welfare programs.
• Financial Inclusion:
  • Aadhaar has facilitated the opening of bank accounts under the Jan Dhan Yojana.
  • The Aadhaar-enabled Payment System (AEPS) allows banking transactions using biometric authentication, promoting digital payments.
• Digital Transformation:
  • Aadhaar has become the foundation for various e-governance initiatives like DigiLocker, e-KYC, and online tax filing.
  • It has streamlined processes for obtaining passports, mobile SIM cards, and railway bookings.
     

Challenges and Criticism of Aadhaar

• Privacy Concerns:
  • Critics argue that Aadhaar poses a risk of mass surveillance and breaches of privacy.
  • The Supreme Court in the Puttaswamy case (2017) ruled that privacy is a fundamental right and placed restrictions on the mandatory use of Aadhaar.
• Data Security Issues:
  • Despite UIDAI's assurances, there have been reports of Aadhaar data leaks, raising concerns about cybersecurity.
  • The lack of a robust data protection law increases the risk of unauthorized access.
• Exclusion of Beneficiaries:
  • Many marginalized individuals lack access to Aadhaar enrollment centers, leading to exclusion from welfare benefits.
  • Errors in biometric authentication have resulted in denial of essential services, especially in rural areas.
• Concerns Over Mandatory Linking:
  • The Supreme Court ruled that Aadhaar cannot be made mandatory for services like bank accounts and mobile numbers, except for welfare schemes.
  • The government has faced criticism for attempting to link Aadhaar to voter IDs and other non-welfare services.
     

Judicial and Legislative Developments

• Supreme Court's Aadhaar Judgment (2018):
  • Aadhaar was upheld as constitutionally valid but with restrictions:
  • Mandatory for government subsidies but not required for mobile SIMs, bank accounts, or private sector use.
  • Private companies cannot demand Aadhaar authentication for services.
     
• Personal Data Protection Bill, 2019:
  • Proposed to regulate the storage and processing of Aadhaar data and strengthen data privacy protections.
     

Suggestions for Improvement

• Stronger Data Protection Laws: Implement a robust data protection framework to secure Aadhaar information.
• Enhanced Biometric Systems: Improve authentication accuracy to reduce exclusion of beneficiaries.
• Better Grievance Redressal: Strengthen mechanisms for citizens to address Aadhaar-related issues.
• Increased Awareness: Educate citizens about their Aadhaar rights and security measures.

Case Laws:

• Justice K.S. Puttaswamy (Retd.) & Anr. v. Union of India (2017) 10 SCC 1
  • Key Issue: Whether the Right to Privacy is a fundamental right under the Indian Constitution.
  • Judgment:
    • The Supreme Court unanimously held that privacy is a fundamental right under Article 21 of the Constitution.
    • This decision laid the foundation for subsequent scrutiny of Aadhaar's mandatory nature in various services.
  • Impact on Aadhaar:
    • Strengthened arguments against mandatory Aadhaar linking for services like bank accounts and mobile connections.
       
• Justice K.S. Puttaswamy (Retd.) v. Union of India (Aadhaar Case) (2018) 1 SCC 809
  • Key Issue: The constitutional validity of the Aadhaar Act, 2016 and its mandatory linking with services.
  • Judgment:
    • The Supreme Court upheld the Aadhaar Act as constitutionally valid but imposed restrictions:
    • Aadhaar can be used for government welfare schemes but not for private sector authentication.
    • Aadhaar cannot be made mandatory for bank accounts, mobile numbers, or school admissions.
    • Section 57 of the Aadhaar Act, which allowed private companies to demand Aadhaar authentication, was struck down.
    • The court directed the government to strengthen data protection measures.
  • Impact:
    • Aadhaar linking to PAN cards was upheld (essential for tax compliance).
    • Aadhaar linking to mobile numbers and private sector use was struck down.
       
• Binoy Viswam v. Union of India (2017) 7 SCC 59
  • Key Issue: Is mandatory Aadhaar-PAN linking valid?
  • Judgment:
    • The Supreme Court upheld Section 139AA of the Income Tax Act, which mandates linking of Aadhaar with PAN.
    • It reasoned that Aadhaar helps in preventing tax evasion and duplicate PAN cards.
    • However, it clarified that bank accounts and SIM cards cannot be mandatorily linked with Aadhaar.
  • Impact:
    • Aadhaar-PAN linking became mandatory for filing Income Tax Returns (ITR).
       
• Shanta Sinha v. Union of India (2018)
  • Key Issue: Challenged the mandatory linking of Aadhaar with bank accounts and mobile numbers.
  • Judgment:
    • The Supreme Court ruled against mandatory Aadhaar linking for private services.
    • Struck down RBI's directive making Aadhaar compulsory for bank accounts.
  • Impact:
    • Banks cannot deny services to customers who do not have Aadhaar.
    • Aadhaar is not required for telecom services.
       
• Ritesh Sinha v. State of Uttar Pradesh (2019) 8 SCC 1
  • Key Issue: Can law enforcement agencies compel individuals to provide their Aadhaar details for investigation?
  • Judgment:
    • The Supreme Court ruled that law enforcement cannot force Aadhaar authentication unless there is specific legal backing.
  • Impact:
    • Strengthened privacy protections against unlawful data collection.
       
• Lokniti Foundation v. Union of India (2017) 7 SCC 155
  • Key Issue: Whether Aadhaar should be compulsory for mobile SIM verification.
  • Judgment:
    • Initially, the Supreme Court upheld Aadhaar-based SIM verification to curb fraudulent mobile connections.
    • However, after the Puttaswamy (2018) judgment, Aadhaar was no longer mandatory for obtaining SIM cards.
  • Impact:
    • Aadhaar-based e-KYC for SIM cards was discontinued after the 2018 verdict.

Conclusion
The Aadhaar Act, 2016, has transformed the delivery of welfare services in India by improving efficiency, reducing corruption, and promoting digital inclusion. However, concerns related to privacy, security, and exclusion must be addressed to ensure Aadhaar remains a tool for empowerment rather than control. Striking a balance between technological advancement and fundamental rights will be crucial in shaping Aadhaar's future role in governance.