Wednesday, 23 June 2010

The Universal Identification Number

The UIN project is one of the elements of "Soft Infrastructure" that Governments all over the world provide. I will describe some other aspects of Soft Infrastructure in a later post. In this post, I'll concentrate on the not so obvious fall-outs of the UIN project. Firstly, the UIN will allow individuals to be tracked, and as an extension, make it easier to enforce contracts or penalize infringements of laws. This will make India a more law abiding nation. Secondly, the UIN may reverse the gradual process of dis-enfranchisement that has been taking place in India. And finally, the UIN may provide a model by which the upper & upper middle classes of India can engage in the process of Governance.

Just try looking for Rahul Basu on Facebook. There are nearly 100. I was shocked to find that there are 15 Rahul Basus just on the voting lists for Kolkata. And I know of a father and son who have the same name and who live in the same house. This has important implications for all of us. Take for instance a situation where someone is driving on the wrong side of the road. We can take a picture on our phone, but sending it to the traffic police is an exercise in futility. Most likely, the database of cars and owners is wrong and not linked up nation-wide. The cost of enforcing even a Rs. 500 fine is pretty high, and the fine itself pretty low compared to the income / wealth of most car owners (which is why the US policy of forcing a 8 hour defensive driving course is equitable - 8 hours has a more similar value to everyone relative to Rs. 500). Hence, nothing much will happen. 

However, with the UIN in place, what could happen is for all car owners & drivers to have their UIN also registered. The infringement to get recorded into a database against the owner's name. When the owner triggers the UIN authentication for some other reason (renewing his passport for example), the infringement can get triggered and the fine enforced. Even more importantly, such an event can get recorded into a "reputational database" and stored for easy access for a long time (this is the role played by the credit score databases). This kind of tracking is much easier with a UIN as the likelihood of incorrect identification is much lower - I can't simply say that it was a different Rahul Basu :(

A similar analysis would apply to enforcement of a small private contact, especially when the offending person vanishes. With the UIN in place, it will be worthwhile to obtain a court judgement pending location of the person, which will happen sooner or later. This gets much more powerful with the "reputational database" - credit scores is one area, but it doesn't just have to be that. Suppose all legal cases and judgements (most of which are in the public domain) are available for access over the internet and is indexed by Google. Then finding out about a potential counterparty would become much simpler and very low cost (relative to what it currently is), and a powerful deterrant for breaking simple contracts. 

With a UIN in place, we can have meaningful credit records, which is a great incentive for good behavior. But beware the marketing companies, who will inevitably have much better databases.

Lets look at a related area. The Benami Act was intended to prevent people from circumventing taxes and land ceiling laws - which they were doing by creating fake identities. While the law is in place providing the deterrance, as its without a real means of enforcement, its a paper tiger. However, with the UIN, I presume it will be necessary to record the UINs for all high value transactions ... don't be surprised if lots of land (bank accounts, lockers, shares, etc) suddenly turns up without an identifiable owner. Or people / identities being traded in the grey market so that these properties can be monetized !

Of course the UIN will hopefully reverse the undemocratic trend that's been taking place in the garb of security. In essence, to prove your identity in India today, you need to own property, or be legally related to someone who owns property, or you need to rent property. You cannot simply stay with your friend, or have a live-in relationship, or even be a domestic servant ... that is just not good enough for a passport, a bank account, a PAN number, a driving licence or a ration card. This is really going back over a century when in many countries, you needed a certain level of wealth in order to vote. There are many people in India who are gradually being pushed out of the system, or simply using jugaad to circumvent the system ... as will all the fraudsters and the terrorists.

Quite a few commentators feel that the UIN will obviate the need for an address. However, I remain rather pessimistic about this. I am sure the powers that be will claim that identity is different from residence. And for the first time enrolment, it will be necessary to record an address. Which will need to be verified, and certified. By the Police. (For chai-pani. And property records that they can file for CYA purposes.) And to change the address, we will need the same stuff. And the address is necessary ... where will legal notices go if you float around the country ? How will we trace you if you are a terrorist ? And so many big-ticket items go on the basis of location - fiscal transfers are based on the number of people, taxes paid, small savings, etc. If people don't have a address, then what do we do ?

The last aspect to touch upon is the impact this project is having on the upper and upper-middle classes of India. This project, or Nandan, or the way its been given cabinet ministerial status, or its B-HAG (Big Hairy Audacious Goal) seems to have inspired many. Among my circle of acquaintances, I know of one person who's consulting with UIN, one person who is joining them shortly and others who would like to contribute. And the buzz is that the UIDAI is flooded with resumes of people wanting to do this. 

Its rather funny. Imagine a project in a company to create a unique number for each employee. Being assigned to such a project is unlikely to be a short-cut to the board room. And people are unlikely to be really inspired by it. Or if the UIDAI were tasked with the responsibility of the census ... that's much less sexy. There is something quite interesting going on here, and it is worth some investigating it. If we can understand what is driving it, we will have a way to engage a rather wealthy and powerful group of people in governing India. This is something the US has done rather well ... witness all the CEOs and top notch academics going in for stints in the Government. It helps raise the quality of governance quite a bit. And it slants the governance toward the rich quite a lot.

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