Aadhaar

Topic: Transparency, Accountability and e-Governance · NCERT: Beyond NCERT

Meaning

Aadhaar is a 12-digit random number that the Unique Identification Authority of India (UIDAI) gives to every resident of India, not only to citizens. It is linked to the person's demographic data (name, date of birth, gender, address) and biometric data (fingerprints, iris scans, face photo), and it is used to prove who the person is.

It matters because it is the identity base for Direct Benefit Transfer (DBT), which sends welfare money straight to people. It also raises big questions about privacy, surveillance and exclusion, which the Supreme Court tested in the Aadhaar case of 2018.

Explanation

How Aadhaar works

• Who gets it: any resident, not only citizens.
• What data it holds:
• Demographic data: name, date of birth, gender and address.

• Biometric data: ten fingerprints, two iris scans and a face photo.

• Who runs it: UIDAI, the body that gives out Aadhaar numbers and checks identity when someone uses one.

• Scale:
• Enrolment is over 140 crore, as of the latest available data.
• Aadhaar authentication passed 150 billion transactions in 2025 [6].

Three ways to check identity

• Yes/no authentication (s.8 of the Aadhaar Act):
• The system checks the details a person gives.

• It replies only "yes" or "no". It does not share the person's full data.

• e-KYC (electronic Know Your Customer):

• The person must agree first.

• UIDAI then sends a verified copy of their name, address and photo to a bank or other service.

• Offline verification:

• This uses a QR code or a paper or XML file.
• It does not contact UIDAI's central database.

• The 2019 Amendment made it part of the law.

• Face authentication (checking a person's face, often on a phone) is spreading. It helps elderly people and manual workers whose fingerprints have worn out.

Why it helps accountability

• Leakage means welfare money lost on the way to the poor. It happens through:
• ghost beneficiaries (fake or dead people still on the list);
• duplicate beneficiaries (one person listed twice);

• middlemen.

• Aadhaar + bank account → money goes straight to the person:

• Fewer hands touch the money.

• The state can be held answerable for each rupee.

• JAM trinity: Jan Dhan bank accounts + Aadhaar + Mobile phones. The term comes from the Economic Survey 2014–15. Here, Aadhaar is the "identity" part: it proves who should get the money.

Limits on its use

• Use must be backed by law. After the 2018 judgment, Aadhaar can be made compulsory only where a law shows that its use is necessary and proportionate [3].
• Core biometric data cannot be shared (s.29).
• Authentication logs (records of each identity check) can be kept for at most 6 months.
• A child enrolled by their parents can choose to cancel their Aadhaar on turning 18 (2019 Amendment).

In the Constitution and practice

Growth of UIDAI and Aadhaar, in order

• January 2009: UIDAI is set up by executive notification, a government order and not a law passed by Parliament. It sits under the Planning Commission, with Nandan Nilekani as Chairperson.
• 29 September 2010: the first Aadhaar number is given out at Tembhli village, Nandurbar district (Maharashtra).
• 1 January 2013: DBT starts in selected districts. It mostly uses Aadhaar-linked bank accounts.
• 2016: the Aadhaar Act is passed. UIDAI becomes a statutory body (a body created by an Act of Parliament) under the Ministry of Electronics and Information Technology (MeitY).

The Aadhaar Act, 2016

• Full name: the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016.
• It was passed as a money bill (Article 110). A money bill deals only with taxes, government borrowing or spending from the Consolidated Fund.
• The Lok Sabha Speaker certifies a bill as a money bill. Under Article 110(3), the Speaker's decision is final.
• The Rajya Sabha can only make recommendations, within 14 days. The Lok Sabha may accept or reject them.

• Why it was controversial: the government had no majority in the Rajya Sabha. Critics said the money bill route was used to get around it.

• Key sections:

• s.7: the government may require Aadhaar for a subsidy, benefit or service paid from the Consolidated Fund of India (Article 266). A person without Aadhaar must be offered another form of ID.
• s.33(2): data could be shared for national security on a Joint Secretary's order.
• s.47: only UIDAI could complain to a court about offences under the Act.
• s.57: any body, public or private, could use Aadhaar under a law or a contract.

K.S. Puttaswamy v Union of India (Aadhaar case), 26 September 2018

• Background: in Puttaswamy (2017), a nine-judge bench held that privacy is a fundamental right under Article 21 (and Part III as a whole). The 2018 case tested Aadhaar against that ruling.
• Bench: five judges. The decision was 4:1, and Chandrachud J dissented (disagreed with the majority).
• The test used was proportionality. A limit on privacy is valid only if all four steps are met:
• it is backed by a law;
• it serves a legitimate aim;
• it is necessary;

• it is balanced against the harm it causes.

• Upheld:

• the Act as a whole, including s.7;
• PAN–Aadhaar linking under s.139AA of the Income-tax Act, 1961;

• passing the Act as a money bill.

• Struck down:

• s.57 (private use under a contract) [3];

• s.33(2) (sharing data for national security on a Joint Secretary's order).

• Read down: s.47. "Read down" means the court narrowed the meaning of a section instead of striking it out. Now individuals, not only UIDAI, can complain to a court.

• Not mandatory:
• bank accounts: the linking rule failed proportionality and violated privacy [3];
• mobile SIM linking was held unconstitutional [3];

• school admissions, and the CBSE, NEET and UGC exams.

• Chandrachud J's dissent:

• Passing the Act as a money bill was a "fraud on the Constitution", because it skipped the Rajya Sabha.
• The system makes it possible to profile and track citizens.

• When biometrics fail, people are denied food and pensions, and the Act gives no proper remedy.

• Later: Rojer Mathew v South Indian Bank (2019) doubted how the Aadhaar case handled the money bill question. It sent the matter to a seven-judge bench, which is still pending as of the latest available information.

Aadhaar and Other Laws (Amendment) Act, 2019

• How it came about: it was first introduced as a 2018 Bill [4], then issued as an Ordinance in 2019 (a temporary law made by the President when Parliament is not sitting, under Article 123), and then passed as an Act in 2019.
• Changes:
• s.57 was removed, so private use under a mere contract ended [4].
• Banks (through changes to the PMLA) and telecom companies (through changes to the Telegraph Act) may use Aadhaar for KYC only with the person's consent [4].
• Civil penalties were added: money fines decided by an officer that UIDAI appoints.

Good Governance Amendment Rules, 2025

• Full name: the Aadhaar Authentication for Good Governance (Social Welfare, Innovation, Knowledge) Amendment Rules, 2025. MeitY notified them in January 2025 [1].
• Who can use Aadhaar authentication: both government and non-government entities, for public-interest purposes such as innovation, spreading knowledge and ease of living [1].
• New sectors: e-commerce, travel, tourism, hospitality and health services [1].
• How approval works:
• The entity applies to the concerned Ministry or Department and explains its need [1].
• Applications go through the portal swik.meity.gov.in [2].
• MeitY approves on UIDAI's advice.

In practice: Aadhaar in welfare

• DBT pays benefits mostly through Aadhaar-linked accounts. Examples are PAHAL (the LPG subsidy), PM-KISAN, scholarships and MGNREGA wages.
• Payment rails (the systems that carry the money):
• the Aadhaar Payment Bridge (APB) sends money to the bank account linked to a person's Aadhaar;

• AePS lets people withdraw cash with a fingerprint at a local banking agent.

• Government figures on DBT:

• about ₹3.48 lakh crore saved by plugging leakages [5];

• subsidies fell from 16% to 9% of total government spending [5].

• In India Stack (India's set of shared digital systems), Aadhaar, e-KYC and eSign (signing a document online using Aadhaar) make up the identity layer.

Don't confuse with

• Puttaswamy (2017) vs Puttaswamy (2018): the 2017 case had a nine-judge bench and declared privacy a fundamental right. The 2018 case had a five-judge bench, split 4:1, and judged the Aadhaar Act itself.
• Aadhaar vs citizenship proof: Aadhaar is given to residents, so it does not prove that a person is a citizen of India.
• Aadhaar vs DBT: Aadhaar is the identity tool. DBT is the payment method that uses it to send benefits straight into bank accounts.
• s.57 (private use under a contract) vs the SWIK Rules 2025: s.57 allowed private use through a contract and was struck down in 2018. The 2025 Rules allow non-government use only after government approval.

Prelims Hooks

• UIDAI was first set up by executive notification in January 2009, under the Planning Commission. It became a statutory body under MeitY only through the Aadhaar Act, 2016.
• First Aadhaar: given on 29 September 2010 at Tembhli, Nandurbar (Maharashtra).
• Aadhaar Act, s.7 lets the government require Aadhaar for benefits paid from the Consolidated Fund of India. s.57 (private use under a contract) was struck down in 2018 and removed in 2019.
• Aadhaar case (2018, 4:1):
• PAN linking upheld (s.139AA, Income-tax Act).
• Mandatory bank-account and SIM linking struck down.
• Authentication logs kept for at most 6 months.

• Chandrachud J dissented.

• Trap: the 2018 majority upheld the money bill route. The doubt was later sent to a seven-judge bench in Rojer Mathew (2019).

• The 2019 Amendment allowed voluntary Aadhaar KYC for banks and telecom companies with consent, and let children opt out at 18.

Mains Points

• Efficiency vs rights:
• For: Aadhaar-based DBT cuts out ghost and duplicate beneficiaries. The government claims about ₹3.48 lakh crore saved [5].
• Against: some of the "savings" may come from genuine people who failed authentication (exclusion error). There is also a risk of surveillance.

• Way forward: every Aadhaar requirement must pass the proportionality test of Puttaswamy. Offline options are also needed so that no one is left out.

• The money bill question:

• Passing the Aadhaar Act as a money bill weakened the Rajya Sabha's role, which goes against bicameralism (a Parliament with two Houses).
• It also raises the question of whether courts can review the Speaker's certificate under Article 110(3).

• Chandrachud J's dissent and the pending Rojer Mathew reference keep this an open question.

• Function creep and accountability:

• Function creep means a tool built for welfare slowly spreads to many other uses. The SWIK Rules 2025 reopen private use through approval, not through a law that shows necessity, so it is debatable whether they meet the 2018 judgment.
• Other gaps: a single central database is attractive to hackers, and UIDAI's grievance system is weak.
• Reforms: independent audits, a strong regulator under the DPDP Act, 2023, and clear legal remedies for people who are wrongly excluded.

Related concepts

• Unique Identification Authority of India
• Aadhaar case
• Direct Benefit Transfer
• JAM trinity
• Digital public infrastructure
• India Stack

Read more

• Aadhaar, DBT and digital public infrastructure