Moody's Questions Aadhaar's Reliability in Hot, Humid Climates

The global rating major Moody's Investors Service has questioned the reliability of biometric technologies, "such as fingerprint and iris scam, as used for identity verification by India's Aadhaar programme," in humid and hot climates. 

As per a report in The Hindu, such technological flaws lead to "service denials".  

Aadhaar-based identification system has been in use in India for a range of services, including bank transfers for the beneficiaries of government schemes. The list of services where Aadhaar is mandatory will soon include the payments given to workers under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme. 

The Moody's report, titled "Decentralised Finance and Digital Assets," identifies Aadhaar as the "world's largest digital ID programme," allotting unique identification numbers to millions of Indian residents. 

"The Unique Identification Authority of India (UIDIA) administers Aadhaar, aiming to integrate marginalised groups and expand welfare benefits access," the report reads, adding the "system often results in service denials, and the reliability of biometric technologies, especially for manual labourers in hot, humid climates, is questionable." 

Additionally, Moody's has also raised concerns regarding the security and privacy of users in an Aadhaar-based system. The report highlights that Aadhaar and Worldline (a new crypto-based digital identity token), despite their innovation and scale, have "drawn scrutiny, especially concerning privacy and security." 

To back its concerns related to security and privacy, Moody's has cited instances where certain entities gained access to the Aadhaar information of Indian citizens, which potentially could lead to data breaches. 

Instead of Aadhaar, Moody's has called for the use of decentralised ID (DID) systems such as digital wallets. Their use of blockchain technology makes them better alternatives for users as the latter has better control over their personal data. 

"In a centralised system, a single entity such as a bank, social media platform or government electoral roll controls and manages a user's identifying credentials and their access to online resources. That entity can dispose of the user's identity data - name, address and social security number, for example - for internal or third-party profiling purposes," the report reads. 

Despite increased security mechanisms, as per Moody's, DIDs are not foolproof as they may "encourage group identities and foster political divides."