LIES, DAMNED LIES AND POLITICAL SUBTERFUGE

A seminar titled “RAFALE & NATIONAL SECURITY” had been recently organized in Bengaluru. An elite, erudite panel of speakers spoke on various aspects of the acquisition of the fighter aircraft for the Indian Air Force.

The panel was unanimous in giving the central government a clean chit. The conclusion was that there was no corruption in the deal between India and France as it was a government-to-government contract. It was further pointed out that the “Offset Clause” in the contract will generate business for MSMEs in the country. 

It was also clarified that about 72 enterprises are likely to benefit from the roughly Rs. 30,000 crores of defense offsets. The detailed list of these enterprises selected for “Offset Partnerships”, is available in the public domain at this link. 

The schematic below also summarizes the deal structure vis-a-vis offsets.

Questions of Impropriety

A lady in the audience, who identified herself as a Congress-supporter, refuted the assertion and said that Reliance had orchestrated the scam. She claimed that Reliance had created numerous shell companies and that the deal was shrouded in corruption.

That prompted me to research the veracity of the lady and/or Congress’ claim of shell companies being used to engineer the scam through crony capitalism or otherwise.

The take in a nutshell on the lady’s accusations: ABSOLUTE HOGWASH!!

The Truth About Offset Partners

The details of my research and its findings are below:

1. There are about 60 partners— besides DRDO, the single largest beneficiary of offsets— that Dassault Aviation, Thales and Safran (the three main manufacturers) have contracted with for the offsets.
2. With the exception of one entity, the partners are all corporate entities. Many are listed companies; some are Indian subsidiaries of multinational corporations; and, a few are public sector undertakings and their subsidiaries.
3. With the exception of 3 offset partners, the other partners are all legitimate business entities, which have been in the aerospace and related fields from a time prior to the finalization of the Indo-French deal. The three in question, namely, Dassault Reliance Aerospace, Safran Electrical & Power India and Thales Reliance Defense Systems, are privately held joint ventures and/or multi-national companies.
4. NONE OF THE 60 ENTITIES IS A SHELL COMPANY. The list is provided in the tables below.

There are apparently 20+ other entities which are being considered for offset partnerships [Refer list below]. 

The award of offset contracts are expected to only commence from October 2019.

Scam or No Scam

So then, the moot question: WHERE IS THE SCAM?! Is it the figment of someone’s fertile (or, vile?) imagination??!!!

You be the judge!

Unique Identification: The Right Way Forward

I published a series of blog posts [dated Mar. 28, 2014; Apr. 8, 2014; Apr. 11, 2014 and Apr. 13, 2014] that identified legal infirmities and technological lacunae in the implementation of the Aadhar project. 

While the critical evaluation was generally well-received, some posed: “What’s the way forward?” Others commented that I had only pointed out flaws, but not given any solutions.  

Valid remarks, indeed! So, the stage was set for this piece, a first-cut attempt at recasting UIDAI.

Bolstering the Judicial Mechanisms 

At the outset, regardless of how watertight the identification system is, people with mala fide intentions will find loopholes and exploit them. In this context, the sophistication of technologies used, biometric or otherwise, is a moot point, since there have been many reports of not only fake and forged Aadhar card rackets, but also issue of Aadhar cards to dogs, trees and chairs. 

So then, how to counter rackets of the corrupt and the crooked? How to deter criminals from defrauding the system, through either upstream, fake-identity creation or downstream, fraudulent enjoyment of benefits and subsidies? 

The answer lies in first ushering integrity and discipline into the system. Penal provisions and judicial processes should be stringent enough to adequately and effectively deter offenders from flouting the “unique identification” system. This calls for strengthening the Indian Penal Code, 1860; the Prevention of Corruption Act, 1988; the Information Technology Act, 2000 and the Code of Criminal Procedure, 1973 with amendments to:  

1. Establish special, fast-track courts to try swiftly those accused of misusing or manipulating the system. 
2. Introduce summary proceedings for establishing culpability of those accused of offenses of creating, issuing, approving, possessing or benefiting from fake, forged or fraudulent identities. 
3. Impose on accused the burden of proving innocence, especially in cases of either officials issuing or persons possessing fake identities. 
4. Institute strong vigilance mechanisms, based on, say, statistical sampling and physical inspection, to verify and validate identities. 
5. Frame guidelines for speedy sanction of prosecution of public servants charged with corruption or creation of bogus identities. 

While some of the above measures may seem Draconian, they are necessary to vanquish the unholy “official-criminal” nexus and to introduce greater accountability into the system. Further, the “unique identity” system has to be designed with inherent checks and balances not only to ensure integrity and validity of identities, but also to eliminate false and fraudulent activities.   

Thus, the desideratum for successful implementation of a “unique identification” system in the country is suitable legal reforms. 

System Objectives 

In the overall analysis, the objectives of the “unique identity system” should be to:  

1. Build the National Citizen Register (NCR) and National Legal Residents Register (NLRR) through the above integrated process; 
2. Confer benefits and subsidies on citizens and eligible residents based on the twin registers, NCR and NLRR; 
3. Diligently identify and deport all illegal residents; and, eliminate their names from various other identity databases, particularly voter lists; 
4. Ensure high levels of data quality, integrity, consistency and availability in the repository; 
5. Implement identification mechanisms that are highly robust, reliable and effective, besides being fraud- and tamper-proof.  

Data Capture and Repository Creation 

The current UIDAI approach is a ‘zero-based’ approach, which redundantly replicates efforts of other agencies and authorities. This is inherently flawed since it will bring in ineligible persons and illegal migrants into the system. 

Instead, an integrated approach should govern the data collection process (refer diagram below). The system should not only be compliant with constitutional provisions, but also have requisite parliamentary approvals and mandate.

  

 

System and Process Details 

The focus should be on unification of all “touch-points” and “data-addition or deletion points”, encompassing the following phases of the human life-cycle. 

A) Births & Deaths 

1. Digitize existing births and deaths records; 
2. Build a centralized repository of citizens by integrating all birth and death registries and databases;
3. Network all clinics, hospitals, maternity homes, primary healthcare & childcare centers and mobile healthcare units to enable automatic addition of citizen records in the central repository;  
4. Connect all cemeteries, crematoria, burial grounds, towers of death, cremation ghats, etc. with the central registry to enable automatic registration of deaths in the central repository; 
5. Capture child name and gender along with birth details and parental information;
6. Provide for the capture of biometric data of minors after they attain adulthood. Till then, identification is through parents and guardians. 

B) Immigration check-points 

1. Network all seaports, airports and border checkpoints to capture arrival and departure information of Indian citizens and foreign nationals. 
2. Provide for capture of biometric data of foreign nationals at immigration checkpoints. 
3. Prepare a repository of non-resident Indians and lawfully residing foreign nationals. 

C) Existing Identity Database Unification 

1. Merge all existing “identity databases”, such as driver’s licenses, passports, voter IDs, birth and death registries, Kisan Photo cards, PAN cards, ration cards, etc.; 
2. De-duplicate data based on residential addresses and birth records; 
3. Link biometric data collected by UIDAI (subject to statutory approvals) with consolidated itentity data; 
4. Codify and standardize residential address data available with panchayats, municipalities, utility companies and postal authorities to help make identities “unique” and eliminate redundancies. 

D) Unique Identity Creation & Verification 

1. Validate “unique identities (UI)” physically through household visits (as in the case of issue of ration cards); 
2. Capture biometric data of citizens and legal residents, subject to parliamentary approvals during physical verification; 
3. Make use of the census process as a validity check to: (a) eliminate fake, fraudulent identities, and; (b) clean the UI repository. The census exercise inherently provides a periodic mechanism for ensuring integrity; 
4. Delete all bogus or duplicate identities unearthed during physical verification and biometric matching; 
5. Deport / extradite all unlawfully-residing migrants of foreign origin identified during the verification process; 
6. Institute vigilance squads to independently verify “unique identities” through a random sampling process. 

Insofar as “unique identity” authentication is concerned, I am of the considered opinion that photo cards, with biometric and biographic data encoded into an embedded IC (with or without encryption), is a more elegant and effective solution. That is so, because it minimizes the potential for error and opportunity for misuse that are likely with a network-based authentication service. 

Final Remarks 

A detailed technical study and on-field pilot are indeed essential for ascertaining the feasibility of the "unique identification" system design. Furthermore, it would be prudent to implement the project in a phased manner. 

The long and short of it is that only an integrated (and not isolated) “unique identification system” can be effective in meeting the challenges of scale, scope, complexity, efficiency and effectiveness that India poses. 

Do you agree? 

Aadhar, Corruption and Commonsense - The Last Nail in the Coffin

My earlier blog posts [of Mar. 28, 2014; Apr. 8, 2014 and Apr. 11, 2014] focused on the legal, constitutional and technological aspects of the Aadhar project. 

While all the criticisms in those posts are valid, relevant and necessary, none of them is sufficient for countering the argument in Aadhar’s favour, viz.,

“Aadhar helps remove corruption; it ensures effective implementation of social welfare programmes.” 

Really, I too was blown off my feet when I looked at that justification. That was only till I applied my mind to it. What emerged was a different picture, one that shows Aadhar in the poorer light of being neither fraud-proof nor corruption-proof.

To make out my case, I will start with a review of the Public Distribution System (PDS), as it exists today.

State of PDS Affairs

It is not mandatory to get a ration card in India.  But, it is a must for obtaining subsidized rations from the PDS network of “fair price shops”. There are three types of ration cards - EPL (Extreme Poverty Level), BPL (Below Poverty Line) and APL (Above Poverty Line). Eligibility depends on the economic status of the family.

The Constitution of India empowers (Article 246; List II in the Seventh Schedule) the Legislature of any State to make laws with respect to the control of procurement, supply and distribution of, and trade and commerce in, certain foodstuffs and essential commodities to targeted sections of society through a network of retail outlets called ‘fair price shops/depots’ or ‘ration shops’. 

Accordingly, the powers to administer the Public Distribution System vest with the State Government, which distributes the commodities allotted to the State by the Government of India. The allotment is based on the number of ration cards. This is an important constituent of the strategy for food security, particularly to poor and vulnerable sections of society.

Issue of Ration Card in Karnataka

The process flow for issue of ration cards in Karnataka is as follows: 

• First an (online) application is filed along with documents in support of identity, age, residential address and income level.
• The concerned “food inspector” records the receipt of the application in the prescribed register.
• The food inspector inspects the application and schedules an appointment with the applicant to verify originals of documents submitted in support of age, identity, etc., to determine eligibility for issue of a ‘ration card’.
• After documentary verification, the biometric data of all members of the applicant’s family is collected. The District Supply Office appoints private firms for the registration and collection of biometric data.
• The inspector then visits the applicant’s home address to determine income level (e.g., type of home, vehicles possessed, etc.) and verify entitlements for certain commodities (for e.g., only those households without LPG connections are eligible for supply of kerosene). 
• If the food inspector is satisfied about the eligibility of the applicant for the issue of a ration card, he approves the application. 
• The District Supply Office (DSO) then issues the ration card to the applicant. 
• The card-holder is required to report and get registered any changes in the household status, such as, change of member names or address, births, deaths, etc. 
• The ration card holder then obtains such subsidized, essential commodities (food grains, kerosene, etc.) at affordable prices. 

Systemic Loopholes; Endemic Leakages 

Any layman studying the existing system can recognise that despite checks and balances, there is ample scope for dishonesty and corruption. Major areas for fraudulent subversion of the civil supplies system may pertain to: 

1. Issue of ration cards (e.g., EPL, BPL, etc.) to ineligible persons: This is typically based on false declaration and fraudulent verification of income levels. It can go on with or without the connivance of government officials.
2. Issue of multiple (i.e., duplicate) cards to a household: This can be accomplished in collusion with the food inspector or otherwise. For e.g., a joint family can possess two cards: one card showing father as head of household and son as member and the other, showing son in a separate, nuclear family. Home addresses and names of family members can be modified or misrepresented to facilitate this.
3. Issue of fake or bogus cards: Again achieved with the connivance of the food inspector or otherwise, ration cards can be issued to non-existent “ghost households”. Ration cards can have imaginary individuals fraudulently included by bribing corrupt officials.
4. Non-existent family members: Deaths in a family may not get registered with the concerned authority. Furthermore, family members domiciled in a different place may continue to appear on the ration card.
5. Low quality of commodities: Adulterated and contaminated commodities may be supplied in ration stores.
6. Skimming and diversion of supplies: PDS shop owners, in collusion with government officials, may divert subsidized commodities to the open market. Some ration shops may even hoard and black-market essential commodities that are in short supply. Others may over-charge, falsify wastage or under-measure supplies.
7. Siphoning off unused quota: PDS shop owners, in cahoots with corrupt officials, may divert unused quotas to open markets. The unused quota is shown as fully used-up in books of the shop-owner.

Needless to say, the above scams lead to an inflated number of beneficiaries. It also imposes higher subsidy loss / burden on government. Often organised gangs, of ration shop keepers, government officials, criminals and touts) are involved in these rackets.

Plugging leakages with Aadhar  

Clearly Aadhar can play no role in plugging systemic lacunae numbered 1, 4, 5, 6 and 7 in the list above.  

However, Aadhar can potentially play a pivotal role in eliminating loopholes nos. 2 and 3 in those states, where, unlike Karnataka, biometric data is not captured as part of issue of ration cards. That is however a major assumption, since questions exist regarding:

(a) Quality achieved in successfully recording and de-duplicating biometric data; 

(b) Accuracy, consistency and reliability of “biometric pattern matching” during the identity authentication process; and, 

(c) System ability and availability to validate identity at anytime from anywhere with timeliness.

Thus, Failure to Enroll (FTE) rate, False Accept Rate (FAR) and False Reject Rate (FRR) all play a major role in determining the effectiveness of the biometric. And on top, there is the key metric of ‘stability’ of the biometric data over the lifetime of the individual. 

Effectiveness of Aadhar Biometrics 

A 4G Identity Solutions document (note: 4G-IDS is a supplier of biometric devices to UIDAI) makes interesting observations on fingerprinting efficacy.

1. Fingerprints de-duplication is cost effective only for small population and the cost of de-duplication goes up significantly due to manual intervention required for de-duplicating huge populations. 
2. Fingerprints are susceptible to bad data such as inability of a scanner to read dirty fingerprints clearly. People above 60 years and young children below 12 years may have difficulty enrolling in a fingerprinting system,due to their faded prints or underdeveloped fingerprint ridges. 
3. It is estimated that approximately 5% of any population has unreadable fingerprints, either due to scars or aging or illegal prints. In the Indian environment, experience has shown that the failure to enroll is as high as 15% (i.e., equivalent of about 200 million people in India) due to the prevalence of a huge population dependent on manual labour. 

Iris scanning does offer benefits of very high accuracy. But then, unlike fingerprinting, it is very expensive; it requires a lot of data storage space and network bandwidth for identity authentication in the field. 

Besides, effectiveness of the Aadhar identity validation service is questionable given that availability of non-stop power supply is a major issue in India, especially rural areas. Plus, it is unknown how reliable, robust and rugged identity authentication devices are likely to be in the dusty, hostile, often extreme operating environments of India - hot ‘n humid at some places; cold ‘n frigid at others; dry at some times of the year and wet ‘n damp at other times.

Grass-root Level Corruption and Criminal Activity 

The key question though is whether Aadhar can counter corruption effectively if determined criminal gangs are hell bent on exploiting and undermining the system.  

The answer is an emphatic NO!! 

In fact, Aadhar might increase leakages, because it enables illegal migrants to obtain Aadhar cards.  After all, it just takes an introducer's signature for such illegal foreign nationals to enroll themselves in UIDAI. Besides, creation of fake identities, by registering manipulated biometric data, is easier, particularly with the active involvement of enrolling agencies in such rackets. For instance, left slap and thumb prints of one person; right slap prints of another can be used to create a fake identity. It is equally easy to create bogus identities with the biometrics of the old and blind (unreadable fingerprints and non-existent irises).  

Further, rations can be withdrawn from fair-price stores either by claiming that sophisticated biometric validation devices are defective or by sabotaging them. Indeed, we can’t put the use of such devious and fraudulent methods beyond determined criminals. Can we? 

A worse scenario is that of identity theft. With the active involvement of enrollment agencies, criminals can have the biometrics of dead people replaced and continue to use their identities. Such nefarious plots can be hatched to hijack the identities of the living too.

Fighting Flaws and Failings 

Before implementing a high-cost, high-risk system like UIDAI, it would have definitely made sense for the government first to take several measures to strengthen the system at the ground level. A few measures that can be taken are: 

1. Greater accountability of officials combined with better vigilance mechanisms.
2. Periodic inspection of households and verification of beneficiaries to eliminate fake, bogus and ineligible cards.
3. Integration of all other identity databases in the country, such as driver’s licenses, bank accounts, voter IDs, birth and death registries, etc.
4. Postal address coding and standardization. 
5. More stringent penal provisions for fake identities and illegal residents. 
6. Fast track courts and summary proceedings for prosecuting accused guilty of defrauding the public distribution system.

Conclusion

So the big question: How foolproof, fail-proof and FRAUD-PROOF is the Aadhar system? 

Unless we have a concrete answer based on incontrovertible evidence, the conclusion is that Aadhar is a damn costly and risky venture. 

Or, should I say, adventure?