Indian Government Mandates Aadhaar System for Welfare Payments

The Indian government has mandated that subsidies and incentives under welfare schemes be delivered exclusively through the Aadhaar Payment Bridge (APB) system, with 100 percent Aadhaar biometric authentication. This directive, issued to all Ministries and Departments, aims to streamline benefit distribution, improve transparency, and eliminate inefficiencies in the entitlement process. To further these efforts, the Ministry of Labour & Employment has instructed the Employees’ Provident Fund Organisation (EPFO) to accelerate the activation of Universal Account Numbers (UAN) for employees using Aadhaar-based systems.

The APB system, developed by the National Payments Corporation of India (NPCI), utilizes Aadhaar as a central identifier to channel government funds directly into Aadhaar-enabled bank accounts (AEBA). By eliminating delays, paperwork, and intermediaries, the system ensures timely and accurate disbursement of benefits. Additionally, it reduces leakages by identifying and removing ghost and fake beneficiaries. According to NPCI, the APB system supports up to 10 million transactions daily and adheres to ISO 20022 messaging standards, making it robust and scalable for extensive government use. As highlighted in recent digital infrastructure reports, the NPCI has been pivotal in advancing India’s digital payment infrastructure, which has seen significant growth in recent years.

Employers have been directed to activate UANs for employees joining during the 2024–25 financial year by November 30, 2024, beginning with the most recent hires. This Aadhaar-linked activation process is intended to extend to all employees and is expected to provide comprehensive online access to EPFO services. Once activated, employees can manage provident fund accounts, submit claims, update personal details, and track claims in real-time, eliminating the need for physical visits to EPFO offices.

The government’s push for UAN activation is a step toward modernizing employee benefit systems and enhancing service delivery efficiency. Recent developments in facial recognition technology have influenced the upcoming integration of biometric authentication with face recognition for UAN activation, reflecting the government’s focus on leveraging advanced technology to secure and streamline digital infrastructure. This initiative is also aligned with India’s broader agenda to promote “Ease of Doing Business” and transition to a digital-first economy.

The APB system has already demonstrated considerable success in reducing corruption and ensuring efficient benefit delivery. According to recent biometric authentication studies, under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Aadhaar-enabled Direct Benefit Transfers have achieved a success rate of over 99 percent, with most payments processed through the APB system. This success story underscores the effectiveness of biometric authentication in enhancing the integrity of welfare programs, a theme that has been echoed in our ongoing coverage of digital identity initiatives globally, including recent advancements in biometric systems in other countries.

Source: Devdiscourse

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November 21, 2024 – by Ali Nassar-Smith