Aadhaar to be voluntary for mobiles, bank a/cs

New Delhi:

The government on Monday decided to move amendments to at least three laws to allow voluntary use of Aadhaar for getting a mobile connection or opening bank accounts. At the same time, consumers will have the option to use any other identity or address proof for availing of these services.

The Union Cabinet has proposed amendments to the Telegraph Act, Prevention of Money Laundering Act (PMLA) and Aadhaar Act in what was described as a move to provide convenience to individuals who were willing to share their details. The amendments will once again open the doors for e-KYC, a biometric authentication facility for those open to sharing their Aadhaar details.

VOLUNTARY USE

Can get Aadhaar info erased from database after a child turns 18

The plan will also help telecom companies, banks and financial technology firms, which were worried about massive paperwork after the Supreme Court ordered that Aadhaar could not be mandatory for services other than direct benefit transfer, social welfare schemes or issuing of permanent account number (PAN) by the income tax department. The apex court had said the provision in the law had no legal backing, though it had held constitutional validity of Aadhaar for the distribution of state-sponsored welfare subsidies.

The amendments proposed by the government also include a provision that gives a child the option to withdraw her Aadhaar details and thereby ask the Unique Identification Authority of India (UIDAI) to strike down all the details from its servers once she tur ns 18. This will mean the UIDAI will have to delete all the data, including biometrics of the person who withdraws from the scheme.

“The amendments will enable the use of Aadhaar in the state’s interest and it will also ensure privacy of Aadhaar information,” an official said, adding that changes are in compliance with the SC order.

Sources said the government has also accepted some of the recommendations of Justice Srikrishna Committee along with the SC ruling and is proposing to penalise those who do not comply

with the norms related to deletion of details or denial of service.

Conceptualised under the previous UPA regime in 2009, under the extraordinary Aadhaar programme provides for giving every resident a biometric ID by assigning a unique 12-digit identification number after collecting their biometric data and photographs. It was envisioned as a cost-saving tool that could improve the delivery of services and subsidies to poor by eliminating bogus beneficiaries and checking diversions.

Should RBI Be Independent?

A pushback is underway, globally, against the tenet of central bank independence

Baijayant ‘Jay’ Panda

With the Reserve Bank of India (RBI) seeing its third governor in just over two years, there is renewed debate about its independence. This is a debate worth having, but not on narrow partisan lines. Instead, it is instructive to examine central banking’s history and its present day challenges.

Modern politics, governance and even economics often resonate with the dilemmas faced by nations millennia ago, with relevant lessons from the Roman republic, the Mauryan empire and the like. But central banking is different.

Central banks are a construct of modernity for which there is no specific ancient wisdom. The first one, formed exactly 350 years ago, was Sweden’s Riksbank, followed by the Bank of England (1791). Both were joint stock companies, aiming to lend funds to and buy debt from government. Others soon followed, including in the US and France.

This was progress from an earlier era of large merchants financing the sovereign. For example, the famous Rothschild family not only financed European rulers, but also profited heavily from a continent-wide courier network and its ability to get information ahead of others on the latest developments in markets and battlefields.

The role of central banking has evolved considerably since then. Two of its most vaunted aspects, core to the current debate, have been the entrenched orthodoxy for only four decades. These are: central banks’ independence from governmental interference and their focus on inflation targeting, which often puts them at odds with governments’ yearning for profligacy.

Though important voices have usually supported central banks’ independence, some have also questioned it. Former US treasury secretary Lawrence Summers wrote that “Independent central banks are better at controlling inflation. Shielded from the pressures of day-to-day politics, they can take a longer term view and make unpopular decisions.”

On the other hand, Nobel laureate Joseph Stiglitz has argued that “economies with independent central banks don’t always do better in financial crises. The reason is that, as central banks have turned to new tools such as bondbuying to juice their economies, they have taken on more of the roles (of) lawmakers and government spending. The broader their tasks and wider the effects, the more politics is bound to intrude.”

This yin and yang on central banks’ independence comes down to a larger dilemma in democracies. That is, how much to leave to dispassionate experts who can take cold, hard decisions, rather than to popularly elected governments that are susceptible to short term pressures? Do governments take populist, economically unsound decisions? Of course, they do from time to time. But equally, are unaccountable, unelected technical experts infallible? Sadly, they are not. More on this below.

Ironically, the second article of faith about central banking demonstrates this dichotomy rather starkly. The practice of inflation targeting, now seen as almost its raison d’etre, did not happen in a vacuum. Rather, it happened because politicians – specifically, British Prime Minister Margaret Thatcher and US President Ronald Reagan – backed them into doing so in the 80s.

The shift in the early 80s came after years of economic stagnation and high inflation in Western nations. That stagflation, as it was called, has been attributed to the Keynesian economics behind high tax and spend government policies. An interesting side note is that, though he was one of the most influential economic policy makers of the 20th century, Keynes did not actually have a degree in economics.

In any event, it was voters’ disenchantment with the economic malaise of the 70s that gave conservative politicians like Thatcher and Reagan room for tough, rational decisions. Those included reduction in government expenditure, tax cuts and indeed supporting higher interest rates to curb inflation.

Much has happened since then, and recent years have seen a pushback against central banks’ independence. A major turning point was the global economic crisis of 2008, precipitated by the US housing bubble. Legendary central banker Alan Greenspan, chairman of the US Federal Reserve for nearly two decades, was accused of having kept interest rates too low and causing the crisis. In Congressional hearings, he admitted he “made a mistake”.

In recent years India’s RBI has been accused of the opposite sin, that of repeatedly getting its inflation forecast wrong and keeping interest rates too high, thus starving a growing economy of much needed liquidity. The resultant push by India’s government to make RBI more cooperative is far from unique.

Globally, though central banks’ formal operational independence is still rather new – for instance, the Bank of England only got it in 1997 – there are already reverses. In 2013 the Bank of Japan agreed to coordinate policy with the government, and other nations are trying to follow suit.

Only time will tell how Shaktikanta Das will perform as RBI governor, but he would do well to find a balance between taking tough, unpopular decisions – with or without government backing – while also keeping an open mind towards urgent, short to medium term economic imperatives.

Finally, the assumption that former bureaucrats are sure to be pliant RBI governors is not borne out from experience, with both YV Reddy and D Subbarao having been widely respected. In fact, Stiglitz went so far as to say that the last US recession might have been avoided if Reddy had been the Fed chairman.

The writer is a former member of Parliament (Lok Sabha and Rajya Sabha)

shivam