NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, August 31, 2017

As India uses Aadhaar to advance financial inclusion efforts, it is essential that both privacy and financial interests of the poor are protected. The Supreme Court in a landmark ruling on 24 August decided unanimously that there is a fundamental right to privacy in India. It called on the government “to examine and put into place a robust regime for data protection”. Legislation to protect the privacy interests of the poor should now be top of the agenda.

What should that legislation look like? Unhindered by the outdated and entrenched approaches to privacy in jurisdictions such as the US and Australia, India has the unique opportunity to put in place a model system for the governance of privacy, one that is far better suited for the digital age and for expanding financial inclusion.

A data protection law is especially important at this early stage in the development of databases, policies and systems in India that rely upon Aadhaar. While Aadhaar promises to bring improvements in the delivery of services to poor people and under-served communities, it could also facilitate the collection of massive amounts of information, which would expose vulnerable consumers to privacy risks—competing factors that well-crafted legislation can address.