Billionaire Makes Biometric Bet to Bring Growth to Indias Poor

By Bibhudatta Pradhan and Saikat Chatterjee

Jan. 22 (Bloomberg) -- Corrupt officials in the Indian state of Bihar
steal a third of laborer Balram Singhs $2.20 daily wage, withdrawing
money from his post office account without providing proof of
identity.
We dont get the full wages, said Singh, 48, who toils in Jamui
district in the eastern state under a jobs program set up in 2006 to
tackle village poverty. Money is withdrawn and distributed by a
supervisor, who takes a cut. We just give a thumb print on a piece
of paper, said Singh, who is illiterate.
To help the hundreds of millions of rural poor like Singh, India
turned to billionaire Infosys Technologies Ltd. founder Nandan Nilekani to devise a fraud-proof identity
number. A year from now hell begin rolling out the worlds biggest biometric database to enable the half of
Indias 1.2 billion people who lack access to financial services to open an ICICI Bank Ltd. account or sign
up for a Vodafone Group Plc mobile phone.
There is huge mass of people who dont have any form of acknowledged existence, Nilekani, who stepped
down as co- chairman of Infosys in July to set up the Unique Identification Authority of India, said in an
interview in New Delhi. There is no limit to how this number can be used. Its like a road. What travels on
the road, we dont know.
A secure identity database will remove one of the biggest hurdles preventing the poor from accessing state
benefits and the wider economy, Nilekani, 54, said.
Rapid Growth
Nilekanis appointment was part of efforts by Prime Minister Manmohan SinghsCongress party-led
government to increase incomes for more of the 456 million Indians the World Bank says live on less than
$1.25 a day.
India, the worlds fastest growing major economy after China, may expand by up to 8 percent this fiscal
year, according to the finance ministry, just shy of the average 8.7 percent growth in the four years ended
March 31.
Nilekani, who at Infosys served clients including General Motors Co. and Goldman Sachs Group Inc.,
plans to appoint a consultant next month to draft a tender to run the database that will include names,
dates of birth, fingerprints and photographs.
Ive a mandate to give an identity number to every Indian resident and the two big drivers for that are to
create one more form of inclusion and to improve the quality of public spending, Nilekani, who aims to allot
the first 16-digit number in February 2011 and cover 600 million people in five years, said Jan. 12.
While using the numbers wont be compulsory, Nilekani said the programs advantages will attract banks
and utilities wanting to target fraud and help the government ensure subsidies that account for more than
14 percent of Indias total expenditure, or $28 billion, reach their intended beneficiaries.
Stop Corruption
When you find ways and means to stop corruption, people find ways to circumvent it, said Nikhil Dey, a
founder of Mazdoor Kisan Shakti Sangathan, or Workers and Farmers Unity Organization, which works in
the western state of Rajasthan and audits the jobs program that pays Balram Singh. Secure ID may cut
fraud but it will still need a constant vigil. Technology will have to be extremely robust, he said.
India has experience of tallying and tracking people across the worlds biggest democracy -- 714 million
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people were eligible to vote in 2009s parliamentary election. More than 40 million households across India,
stretching from the Himalayas to the Indian Ocean, participate in the jobs program.
Still, Nilekani will need to overcome technological challenges and ensure the project doesnt exacerbate
Indias budget deficit, estimated to reach a 16-year high in March. Nilekani told lawmakers Dec. 16 the
program may cost about 300 billion rupees ($6.6 billion), without giving a time period.
Outweigh Benefits
There is no clear estimate of the cost involved in implementing the project, which could outweigh the
benefits, said R. Ramakumar, an assistant professor specializing in rural development at the Tata Institute
of Social Sciences, in an interview from Mumbai.
Cost is the least of Rakesh Kumars worries. Kumar, 23, has been repairing shoes under a tree near Indias
federal parliament in the capital after losing his job as a parking attendant in 2007. Nine years after
leaving his Rajasthan village he doesnt own a mobile phone and doesnt receive the subsidized food and
cooking gas hes entitled to.
Its easy to buy a phone but they wont give me a connection until I can provide an address proof, said
Kumar, who lives in an illegal settlement in the citys south.
India has made it mandatory for mobile phone operators including New Delhi-based Bharti Airtel Ltd.,
Indias largest, to verify the identity of applicants to eliminate fake users and improve security.
The identity number project has the potential to empower every citizen, bring transparency, and boost the
economy -- if its implemented properly, said Kris Dev, an e-governance consultant based in Chennai.
To contact the reporter on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net;
Saikat Chatterjee in New Delhi at schatterjee4@bloomberg.net.
Last Updated: January 21, 2010 13:30 EST




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