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How the government based its $11 billion Aadhaar savings claim on a fuzzy estimate

Many government officials, including Finance Minister Arun Jaitley, have cited a 2016 World Bank report which pegged government's annual savings from the usage of Aadhaar at $11 billion.

January 14, 2019 / 02:07 PM IST

The validity of Aadhaar was the biggest talking point in India in 2018, kickstarting debates about the government's ability to handle public data. The Centre backed use of the unique identity card saying that it saves the country billions of dollars by weeding out fake beneficiaries of welfare schemes. But, how credible are these claims?

Many government officials, including Finance Minister Arun Jaitley, have cited a 2016 World Bank report which pegged government's annual savings from the usage of Aadhaar at $11 billion, which is nearly Rs 77,000 crore. When the constitutional validity of Aadhaar was being determined in the Supreme Court, the government had submitted this report as a supporting document.  However, experts who studied the document have deemed its methodology 'shaky', Quartz reported.

Content and intent of the report

Anand Venkatanarayanan, a cybersecurity researcher and an expert on Aadhaar, reached out to one of the World Bank officials who produced the report. The latter said the international body was privately skeptical of the Aadhaar programme's implementation.

The World Bank official is quoted in the news report as saying, "the (savings) number came with three caveats that you continue to ignore:

-it's a potential, and not an actual estimate,
-it is based on extrapolation of existing studies done by academics and researchers and not by World Bank staff,

-and it is conditional on having an accountable government that is keen to empower and not control its citizens. In today's India, many of the underlying conditions are not met and hence the potential has yet to be realised." The official went on to question the government using the report without mentioning these points.

Some senior World Bank officials have claimed in public that Aadhaar has already helped the government save a loot of money. To this, the official responded saying many senior officials talk about the benefits that may have come from digital identification while stressing that much of this potential remains unrealised because of missing complements like "accountable governments and inclusive institutions".

"It is obvious these complements don't exist to make such a large saving possible at this stage in India," the official said, adding that the report was meant to reflect how digital technologies and dividends like growth, jobs and services have lagged behind.

The $11 billion savings footnote

In the World Bank report, there was a controversial footnote which made the claim that the government will save $11 billion from Aadhaar annually. This data is attributed to a study by the Consultative Group to Assist the Poor, but Quartz claims that this study did not make any such statement. It only stated that $11 billion was the total estimate of the government's annual expenditure on "major cash transfers".

After economists Reetika Khera and Jean Dreze studied the matter intensively and contacted the international organisation, the footnote was changed and the new footnote actually cites reductions observed in two government programmes.

"It was bad enough that when the 'error' in the World Bank's savings figures was pointed out, instead of correcting their mistake, they made another convoluted attempt to justify the earlier error," Khera told the news website. "Almost a year after the discredited savings figures were exposed, FM Jaitley used them again in his blog on Aadhaar."
Moneycontrol News
first published: Jan 14, 2019 01:52 pm

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