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India’s Aadhaar programme and Decentralisation

  • Published
    25th Sep, 2023

The Moody’s Investors Services’ has cautioned against the Centralized ID systems such as Aadhar in India, as they pose security and privacy threats.

  • In a report on “Decentralized Finance and Digital Assets” issued, Moody’s acknowledged Aadhaar is the world’s largest digital ID program that assigns unique numbers to over 1.2 billion Indian residents using biometric and demographic data.
  • The Aadhaar system enables access to public and private services, with verification via fingerprint or iris scans and alternatives like One-Time Passcodes (OTPs).
  • However, it faces hurdles, including the burden of establishing authorization and concerns about biometric reliability.

In August, the government extended its deadline for switching to Aadhaar-based payment system (ABPS) for MGNREGA beneficiaries for the fifth time, pushing it to December 31, 2023.

Aadhar ID system in India:

  • The UIDAI is a statutory authority established on 12th July 2016 by the Government of India under the jurisdiction of the Ministry of Electronics and Information Technology, following the provisions of the Aadhaar Act 2016.
  • The UIDAI is mandated to assign a 12-digit unique identification (UID) number (Aadhaar) to all the residents of India.
  • The Aadhaar card includes demographic information like the citizen's name, father's or mother's name, date of birth, sex, and address, as well as biometric information like a photograph, fingerprints, and information about the iris (eye).
  • The central government of India controls and manages Aadhar cards.

The Supreme Court determined that the Aadhaar Act is a reasonable exception to the right to privacy because it serves a legitimate state goal and is proportionate.


  • A single entry controlling users’ ID credentials can dispose of user data for internal or third-party profiling purposes.
  • Aadhar faces hurdles, including burden of establishing authorization.
  • The system often results in service denials, and the reliability of biometric technologies, especially for manual laborers in hot, humid climates, is questionable.

Need for decentralized system:

  • The multiple significant security flaws that have plagued Aadhaar's operations and made the system vulnerable to data leaks have been among the technology's most serious detractors.
  • Almost 200 official government websites unintentionally exposed personal Aadhaar information in 2018, and the issue got so bad that one could easily access thousands of government databases containing confidential information by just Googling it.

Related Judgments:

  • The case of Justice Puttaswamy and Others v. Union of India and Others was brought in 2018 by the Supreme Court's constitutional bench, which rendered a 4:1 majority decision rejecting this claim challenging the validity of the Aadhar card.
  • The Bench invalidated Section 57 of the Aadhaar Act, which mandates the use of an Aadhaar for verification by private businesses and permitted businesses and people to demand an Aadhaar in payment for goods and services, which was also repealed.
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