Unique ID spinoffs for banks, IT

If Nandan Nilekani, chairman of Unique ID Authority, is able to implement his recommendations, it can transform the way the country works. Apart from transforming the way the entire system operates, what it also opens up are opportunities to various sectors.

The task force has called for setting up an IT-driven core subsidy management system (CSMS) to leverage the ‘Aadhar’ unique identity numbers for distribution of subsidy. Beneficiaries would receive subsidy transfers to their ‘Aadhar’-linked bank accounts on a real time basis, which could be accessed through various banking channels, such as bank branches, ATMs, internet and mobile banking.

The immediate opportunity here is for the IT companies, most of whom have already started gearing up to the huge demand in the country itself. With a population nearing 1.2 billion, the country would need a massive infrastructure to support CSMS. Not only the banking industry but also the post offices (which in rural India are a substitute for banks) need to gear up to meet operation requirement.

This is good news for hardware and software companies.
There are a few Indian companies like Vakrangee Software who are actually the feet-on-the-ground, best positioned to take advantage of this mapping opportunity. Among the bigger companies, TCS has taken bold steps in penetrating the Indian market.

As far as the issue of subsidy is concerned, the move will result in it reaching the actual beneficiary, bringing down pilferages which account for a substantial portion of the subsidy. There will always be cases of misuse, but it can be easily tracked given the information in hand. Before implementation, however, the system of delivery needs to be revamped. With input and output being recorded at every transaction point, leakages in the system can easily be identified and plugged.

With prices of commodities linked to market prices, the issue of oil subsidy will also be taken care of, thus making oil marketing companies more attractive in the markets. Implementation is the key, the opportunity that UID throws up in a country like India can literally transform it and give the push that the economy desperately needs.