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What's the article about?
- It talks about the key findings of the recently released report, “Decentralized Finance and Digital Assets”, by Moody's Investors Service.
Relevance:
- GS2: E-governance- applications, models, successes, limitations, and potential
- Prelims
Context:
- Moody's Investors Service has released a report titled “Decentralized Finance and Digital Assets,” which highlights security and privacy risks associated with India's Aadhaar program.
- The report notes that Aadhaar, the world's largest digital ID program with biometric and demographic details of over a billion residents, is a centralized digital ID system where a single entity controls identifying credentials.
- Moody's has suggested decentralized ID systems that give users more control over their data.
- The report also raises concerns about the efficacy of Aadhaar's biometric-based authentication systems to verify identities, especially for manual laborers in hot, humid climates.
Analysis:
- Background of Aadhaar Program:
- The Indian government has made Aadhaar mandatory for almost all welfare benefits to weaker sections, as well as activities such as opening bank or provident fund accounts, securing telephone connections, and remitting taxes.
- The use of Aadhaar has enabled the direct transfer of benefits to millions in welfare schemes and weeding out ghosts and middlemen.
- However, there have also been instances of people being excluded from basic services for lack of an Aadhaar or struggling to confirm their fingerprints and retina scans to prove they exist.
- Concerns Raised by Moody's:
- Moody's report echoes the concerns raised ever since Aadhaar's launch under the United Progressive Alliance regime.
- The report highlights the security and privacy risks associated with centralized digital ID systems such as Aadhaar, where a single entity controls identifying credentials.
- Moody's has suggested decentralized ID systems that give users more control over their data.
- The report also raises concerns about the efficacy of Aadhaar's biometric-based authentication systems to verify identities, especially for manual laborers in hot, humid climates.
- Audit of UIDAI by Comptroller and Auditor General of India:
- The audit of the Unique Identification Authority of India (UIDAI) by the Comptroller and Auditor General of India released last year, which had flagged lapses that jeopardize privacy and compromise data security, along with flaws in enrollment processes leading to duplication and faulty biometrics.
- Recommendations:
- The Indian government must seek an honest review of, and course correction in the Aadhaar program, before expanding its linkages further, be it for electoral rolls, private entities, or MGNREGA payments.
Way Forward:
- The Moody's report highlights the need for India to address the security and privacy risks associated with centralized digital ID systems such as Aadhaar and suggests decentralized ID systems that give users more control over their data.
