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Policy Update: Highlights of the Aadhaar and Other Laws (Amendment) Act, 2019

Context

On 24 July 2019, the Union Cabinet approved the amendments to Aadhaar and Other Laws (Amendment) Bill, 2019. The bill, which has become an Act, seeks to amend the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 and further to amend the Indian Telegraph Act, 1885 and the Prevention of Money-laundering Act, 2002.

The Aadhaar and Other Laws (Amendment) Act, 2019 creates the ground for allowing Aadhaar usage by private entities despite a Supreme Court ruling in September 2018 that Aadhaar can only be used for welfare schemes and for delivering state subsidies.

The amended Act puts onus on offline verification of Aadhaar number holders where the individual will be verified through offline modes without submission of biometric or demographic information to data servers of the Unique Identification Authority of India (UIDAI). “Offline verification means the process of verifying the identity of the Aadhaar number holder without authentication through such offline modes as may be specified by regulations,” according to the Aadhaar and Other Laws (Amendment) Act, 2019.

The Aadhaar and Other Laws (Amendment) Bill, 2019 was introduced in the Lok Sabha by electronics and IT minister Ravi Shankar Prasad on 24 June 2019. It replaces an Ordinance promulgated on 2 March 2019. On 8 July, the Rajya Sabha passed The Aadhaar and Other Laws (Amendment) Bill, 2019.

Key highlights of the Act

  1. Voluntary use of Aadhaar

The Aadhaar and Other Laws (Amendment) Act, 2019 clearly state, “Every Aadhaar number holder to establish his identity, may voluntarily use his Aadhaar number in physical or electronic form by way of authentication or offline verification, or in such other form as may be notified, in such manner as may be specified by regulations.” The Aadhaar Act provided for the use of Aadhaar number as proof of identity of a person, subject to authentication.  However, the Supreme Court, seeking to address privacy concerns and fear of exclusion, ruled that it was not mandatory to use Aadhaar for availing various services/benefits.[1] The amended Act replaces this provision to state that an individual may voluntarily use his Aadhaar number to establish his identity, by authentication or offline verification.  It states that authentication of an individual’s identity via Aadhaar, for the provision of any service, may be made mandatory only by a law of Parliament.

  1. Use of Aadhaar for state welfare schemes 

With the Cabinet giving its nod to the Aadhaar and Other Laws (Amendment) Act, 2019, states will now be able to use the unique identity number for their respective welfare schemes. The move will enable the states to follow the Centre’s model for direct benefit transfer (DBT) using the Aadhaar number. With the amendment, the words “or the Consolidated Fund of the State” have been inserted after the words “the Consolidated Fund of India”, in the long title of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016.

  1. Offline verification of Aadhaar holders

According to the principal Act, Aadhaar ‘authentication’ may verify an individual’s identity.  This involved submitting the Aadhaar number, and their biometric or demographic information to the Central Identities Data Repository for verification.  The amended Act additionally allows ‘offline verification’ of an individual’s identity, without authentication, through modes specified by the Unique Identification Authority of India (UIDAI) by regulations. During offline verification, the agency must obtain the consent of the individual, inform them of alternatives to sharing information, and not collect, use or store Aadhaar number or biometric information.

  1. Introduction of Aadhaar ecosystem

The amended Act defines the Aadhaar ecosystem to include enrolling agencies, requesting agencies, and offline verification-seeking entities. It allows the UIDAI to issue directions to them, if necessary, for the discharge of its functions under the Act. The term “Aadhaar ecosystem” was not a part of the Act originally; it has been incorporated with the latest amendment in a move to lay ground of offline verification.

  1. Deletion of section 57 of the Aadhaar Act

Section 57 of the principal Act which allowed “state or any body corporate or person” to use Aadhaar number for establishing the identity of an individual, has been omitted. This comes after the ruling of Supreme Court in September which said that Aadhaar can only be used for welfare schemes and for delivering state subsidies. It had barred private companies from using Aadhaar data for authenticating customers. However, with amendments to the Indian Telegraph Act, 1885 and the Prevention of Money-laundering Act, 2002, telecom companies and banks have been allowed to use Aadhaar to verify its customers who voluntarily opt for the option.

  1. UIDAI Fund 

 Under the principal Act, all fees and revenue collected by the UIDAI were to be credited to the Consolidated Fund of India.  The amended Act, removes this provision, and creates the Unique Identification Authority of India Fund.  All fees, grants, and charges received by the UIDAI shall be credited to this fund.  The fund shall be used for expenses of the UIDAI, including salaries and allowances of its employees.

  1. Penalties
  • According to the amended act, the penalty for unauthorized use of identity information of an individual by requesting entity or offline verification seeking entity may extend up to ten thousand rupees or shall be punishable with imprisonment which may extend to 3 years. In case of a company, the fine may extend to one lakh rupees along with imprisonment.
  • The court will have to take cognizance of the offence if a complaint is made by an Aadhaar number holder. Earlier, the principal Aadhaar Act mandated courts to take cognizance of any offence punishable under it, only on a complaint made by UIDAI or any officer or person authorized by it.
  • A civil penaltyof up to ₹1 crore will be imposed on entities that violate the provisions of the Aadhaar Act, with an additional fine of up to ₹10 lakh per day in case of continuous non-compliance, the amendment said.
  • Under the amended Act, the UIDAI may initiate a complaint against an entity in the Aadhaar ecosystem for failure to (i) comply with the Act or the UIDAI’s directions, and (ii) furnish information required by the UIDAI.  Adjudicating Officers appointed by the UIDAI shall decide such matters, and may impose penalties up to one crore rupees on such entities.  The Telecom Disputes Settlement and Appellate Tribunal shall be the appellate authority against decisions of the Adjudicating Officer.
  1. Cancellation of Aadhaar

The amended Act provides an option to apply for cancellation of Aadhaar number by its holder, within six months of attaining 18 years of age. Earlier, a young adult did not have the provision of opting out. However, there are no provisions to enable the remaining adult Aadhaar card holders to opt out of the system and get all the data hitherto collected, deleted by banks and other authorities.

 

[1] Justice K.S. Puttaswamy (Retd.) v. Union of India, Writ Petition (Civil) No. 494 of 2012, dated 26 September 2018. Read here.

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