Explained: What are Moody's' concerns about Aadhaar? Five points

Moody's Investors Service expresses concerns about security and privacy vulnerabilities in India's Aadhaar programme; Centre rejects the report.

Moody's Investors Service, a global rating agency, recently expressed concerns about security and privacy vulnerabilities in biometric technologies, specifically mentioning the Aadhaar programme in India. The Centre, however, strongly rejected the report, stating that it raises concerns "without citing any evidence or basis."

Aadhaar is the world's largest digital ID programme.(Representational image/HT_PRINT)

What concerns Moody's has raised against Aadhaar?

In a research note titled 'Decentralized digital identity has rich potential but wider adoption faces obstacles' issued on Thursday Moody's raised several concerns about Aadhaar.

• The United States-based rating agency related Aadhaar with Sam Altman's newly launched Worldcoin. It said both have stood out due to their scale and innovative nature but “they have drawn scrutiny, especially concerning privacy and security.”

• Moody's says the Aadhaar system faces obstacles such as the “burden of establishing authorization and concerns about biometric reliability”.

• The New York-headquartered rating agency raises concerns that the Aadhaar system often results in “service denials, and the reliability of biometric technologies, especially for manual labourers in hot, humid climates, is questionable”. However, it does not provide any evidence or explanations.

• In a research note, Moody's draws attention to Decentralized Digital Identity (DID) saying that it can be “a strategic response to the security and privacy vulnerabilities posed by centralized ID systems like Aadhaar.”

• Moody's emphasises that although DID systems are still in their early stages of development, they hold substantial potential to offer a “more robust and private avenue for managing digital identities.”.

What is decentralised identity and how does Aadhaar differ from it?

Unlike traditional systems, DID allows individuals to own and control their digital credentials. In DID, a person's personal data is securely stored in their digital wallet, and the process of verifying their identity doesn't rely on a single, centralized institution. Instead, it occurs on a decentralised digital ledger, such as a blockchain, Moody's research note said.

On the other hand, Aadhaar, the world's largest digital ID programme, assigns 12-digit unique identification numbers to over 1.2 billion Indian residents using a combination of biometric and demographic information. This system grants individuals access to both public and private services, with verification methods that include fingerprint or iris scans, as well as alternatives like One-Time Passcodes. The Unique Identification Authority of India (UIDAI) serves as the central agency responsible for administering Aadhaar.