NB Financial Innovation
India vs. Pakistan: The Pros and Cons of Two Radically Different Digital ID Systems
India’s digital identification system, Aadhaar, debuted in 2010. Since then, about 1 billion Indians have been registered in the system – nearly 80 percent of India’s 1.3 billion citizens. Due to this incredible number of registrants in a relatively short time, Aadhaar has been lauded as a landmark innovation, one that verifies Indian citizens for critical government services like pensions, subsidized rations and kerosene.
Just across the border, Pakistan has successfully rolled out a very different ID system, NADRA (National Database and Registration Authority). Since its launch in 2000, NADRA has issued 120 million identities among Pakistan’s 180 million citizens, allowing them to vote, open bank accounts and obtain passports. It is seen as a necessity for civic life in Pakistan.
Both systems give citizens an ID and can give them access to both government and commercial services, yet they are radically different.
Aadhaar is a foundational system, and as such it is an entity within itself. But, notably, it is not a national identity system; in fact, even non-nationals residing in India can get an ID through Aadhaar. Aadhaar issues a unique 12-digit code to each registrant with the overarching goal of supporting multiple government functions. This number, linked to biometric data such as fingerprints or an iris scan, is merely a civil registration process; no rights or benefits are automatically attached to it when it is established. Different ministries, businesses or bureaus can choose to buy in to Aadhaar by linking their services to the database. Only then do rights and benefits attach to the number.
For example, the Ministry of Transport can assign driver’s licenses, and banks can provide bank accounts, based on a citizen’s Aadhaar number. Demonstrating confidence in Aadhaar, recent legislation has mandated that government payments need to be delivered through Aadhaar going forward, ultimately easing the delivery of financial payments to the population. However, an Aadhaar number itself will always remain neutral, autonomous from any entity that it supports.
In contrast, Pakistan’s NADRA is a functional national identity service. Functional systems are generally designed to support a single service such as an electoral or birth registry. This is in contrast to a foundational system like Aadhaar where the identifying number is designed to support multiple services.
A functional system could be a national identity system like NADRA (but this is not automatically the case) and it could also be supplemented by a foundational repository (like Aadhaar) where data can be cross-checked against the foundational system. Functional systems are more challenging to scale as they are purpose-built rather than designed to provide an overarching framework, as with a foundational system. A citizen’s data is stored in separate functional systems. For example, if a citizen needs to get a driver’s license, their data will be stored in the Ministry of Transport’s system, and if a citizen opens a bank account, their data will be stored in the bank’s repository system. This is unlike Aadhaar, where government agencies or businesses interact with a single, secure data repository to access an individual’s basic identity data – a much more manageable entry point, especially for businesses.
However, it can be more politically cumbersome to expand a functional system like NADRA across a whole population, as each separate repository has low incentive to share the data they control. Unless pressured to do so, it is unlikely they would share the data solely for the common good.
So which is better? The truth is, these two systems have fundamental differences but both are trying to achieve the same thing: making the invisible visible. And both functional and foundational systems are designed to work with the private sector, and support business. Aadhaar is often praised as an example of economic efficiency, with the catch phrase of “only $1 per person” – in reference to the per-person cost of the ID – but it is certainly easier to achieve this with a population of 1.3 billion people. How can a smaller country – say Moldova or Liberia, both with around 4 million people – achieve this cost efficiency? The financial success of Aadhaar cannot be applied to most other contexts, and it is not helpful to place such expectations on vastly different environments.
For a smaller country like Moldova, a system like NADRA might be a more practical fit; taking the Aadhaar approach would be like demanding cake where the immediate need is bread. Aadhaar can provide identity to people, but won’t be able to serve any functional need of government and citizens. A NADRA-like system is easier to launch because any government ministry or other entity can create their own system. However, it is harder to scale because the data used, such as a driver’s license, is not necessarily integrated within a primary, overarching system. Scaling a system like NADRA requires not only a large amount of programming, but also significant political will and consensus.
To understand which approach offers the best fit, it is crucial to recognize environmental factors and how these would create advantages and disadvantages to the rollout of each system. The proof is in the contextual pudding. For example, Afghanistan is not far geographically from Pakistan or India, and mimicked the NADRA approach to launch e-Tazkira, an established ID system. However, in the three years since it was established, e-Tazkira has not begun issuing IDs because of political, security and ethnicity-related issues.
Selecting the right system has far more to do with the context for which it is intended – including the population size and density, political environment, electrification, connectivity and government interests – than with any technical factors. Countries such as Liberia or Malawi, which have both expressed interest in deploying digital identity solutions, can of course absorb many valuable lessons from the Aadhaar and NADRA experiences – so long as they are also prepared to look carefully at the characteristics at play in their own backyards.
Photo courtesy of USAID/India