Big stakes in Indian numbers game
An Indian IT billionaire aims to supply every citizen of the subcontinent with a unique digital ID, writes Peter Cai.
Nandan Nilekani dreams of giving every "invisible" Indian resident an identity. Nilekani, the billionaire co-founder of IT services company Infosys who has been dubbed the Bill Gates of India, is part-way through the biggest single online IT infrastructure project in the world - giving every Indian a 12-digit unique digital identification number known as Aadhaar, or foundation.
He has enrolled 500 million people in past four years, and aims to add another 100 million by 2014, thereby acknowledging the existence of millions of Indian residents for the first time, and allowing them to open bank accounts, activate mobile numbers and receive government services.
"There are a lot of young people in India without ID of any kind," he says. "But IDs are required to access any basic public services. By giving everyone a unique ID, we are giving them a boarding ramp into the formal economy."
It is estimated that nearly one in two Indian babies today is born without a birth certificate, especially in the poor and rural parts of the country. Forty per cent of rural Indian residents don't have access to banking. Without an official ID, many of them will remain ignored and nameless.
Nilekani, the chairman of the Unique Identification Authority of India, believes in the power of technology to make "transformational difference" to development and poverty reduction in India.
He argues that the unique identification system can compel the government to improve services and provide better access to citizens.
"The government has put in a large number of social welfare programs and it needs to have a good ID system to make sure the benefits reach the right people," he says.
Nearly a third of Indian states are using the ID system to transfer social welfare benefits, such as rice rations and cooking fuels, to residents.
It is hoped that the ID platform will also drive a stake into the heart of India's notorious corruption problem, whereby social welfare benefits disappear into pockets of corrupted officials, and poverty-reduction schemes have been used to develop political patronage.
The number of below-poverty-line ration cards circulating in the Indian state of Karnataka is more than the state's entire population, let alone the number of entitled families, according to Nilekani's book, Imagining India.
"It reduces the diversion of benefits," he says. "Only genuine people receive benefits."
Nilekani is a rarity among captains of industry - he has a broader vision for his country and is willing to act on it. He first floated the idea of creating a "national grid" of unique IDs in 2008 in Imagining India, which outlined his vision for the country.
Barely a year later, the Unique Identification Authority of India was created with support from the government and industry; he dubbed them the Coalition of Positives.
He sees India's vast population, which is often regarded with Malthusian fear, as one of the greatest strengths of the country. He believes India's young population will greatly enhance the economy's dynamism at a time when the rest of the globe is greying.
However, his bullish view on India's demographic dividend has been under attack. Despite the success of India's IT sector and high-end manufacturers like Tata, Reliance and Mahindra & Mahindra, the country has yet to develop a mass manufacturing sector capable of employing millions of young Indians.
China's economic transformation created 130 million jobs in services and industry between 2002 and 2012. But India, the country which has often been mentioned in the same breath as China as the next Asian superpower, created no new jobs between 2004-05 and 2009-10, according to The Economist.
Nilekani says the Indian government is introducing reforms to improve employment prospects.
"I do believe several steps have been taken now to create national manufacturing zones. I am very confident they will be able to create a lot more jobs in manufacturing in the future," he says.
As he completes the huge task of giving every Indian citizen a digital ID, he has reportedly set his eyes on an even bigger challenge - getting elected to the Indian Parliament on a Congress Party ticket.
Nilekani believes the ID infrastructure project is not only a social services scheme but also an innovation hub for the Indian IT industry. He cites the internet and GPS, both of which started as American government defence projects before morphing into trillion-dollar industries that transformed the IT industry.
"GPS is a good example; it is a huge economy of maps, commercial navigation systems, self-driving cars," Nilekani says. "GPS answers the question about where am I - we answer the question, who am I."
Nilekani designed the ID platform as an open application programming interface, which allows programmers to develop new applications.
"Because we are providing this as an open platform, we expect people to build applications over time," he says. He hopes the Indian IT industry will take advantage of the platform to spin off a new industry.
There are signs of that happening already, with the banking and telecommunications sectors already big beneficiaries of this transformation. "We have created a strong coalition of government agencies, banks and telecommunications companies which have stakes in the future of this system," Nilekani said.
Getting a bank account may seem no big deal to Australians, but it could be a life-changing experience for an Indian farmer, enabling him to get access to "micro" loans offered by banks. A senior Indian banking executive told Nilekani the biggest problem for Indian banks was to connect with their invisible customers.
"The one thing that gives me sleepless nights is the ability of us Indian bankers to put a name to a transaction," said Madhabi Buch, a former chief executive of ICICI Securities.
For those who harbour an Orwellian fear of an all-seeing government with access to a vast amount of data on its own citizens, Nilekani says the ID system he is building has been designed with strong safeguards against intrusion of privacy.
He says the ID verification system can be used only for the authentication of a resident's identity, and no data beyond the most basics such as name, birthday and address would be collected.
Nilekani, a tech whiz who graduated from the prestigious Indian Institute of Technology, Mumbai, believes the country's IT industry is capable of transforming India's semi-agrarian economy into a global powerhouse.
"Because of global expertise acquired by Indian companies from building sophisticated and large-scale projects around the world," he said, "now many of them are using that expertise to build innovative solutions for India."
Nandan Nilekani will speak at the Australia India Institute in Melbourne on October 15.