A Parliamentary Standing Committee on Finance is set to recommend that the government withdraw the National Identification Authority of India Bill 2010, reports India Today, citing unnamed sources. The recommendation is to withdraw the bill and introduce another one, because members of the standing committee found the project directionless, and that the bill and the project are not acceptable in their present form, the report states. It doesn’t quite mention the reasons for this recommendation, but once the report is made public, we’ll have more information.

Now we’re not sure if the project appears directionless – the idea and its implementation so far has been to give each individual a unique identification number, to address one of the key issues when it comes to delivery of government services – the verification of the persons identity. Given that the UIDAI is also opening its its API to allow private companies to verify identities, it reduces the cost of verification of identity for the private sector as well. For example, for mobile money, the cost of collecting Know Your Customer information had been put at around Rs 200, around a year ago, by Nokia.

In the same vein, the UID project also serves a backbone (of verification) for the delivery of rural banking services via the banking correspondents model, as well as payments for projects like NREGA at common service centers. Do read this article in the Economic Times on how the UID pilot is being implemented in Jharkhand, both for banking and NREGA payments. The UIDAI has been fairly cryptic about its performance – we got some non sequitur responses from them to an RTI request we had filed for information. That’s become a norm now.

What might be happening is that there might be friction with ministries over implementation and incorporation of the UIDAI, especially among those who want to maintain the status quo. Getting the bureaucracy on board, and having a standardized implementation of projects involving multiple ministries will be key to the project, and frankly, once identity has been established, it serves as infrastructure for digital projects for each ministry.

What the report doesn’t mention, however, is the other danger that exists with the UIDAI project – that of privacy. If you think about it, massive amounts of data can potentially being collected about each individual, across government services, and if the private sector (mobile companies, private banks, employers) also integrate it, just about every transaction could be available to government bodies, and is liable to be misused by unscrupulous government employees or agencies, or those with an agenda. There isn’t a Privacy Bill that has been implemented yet, but the data collection has probably already begun.