Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016

The Act was introduced to provide a statutory framework for the Aadhaar project, which began as an executive initiative in 2009 under the Unique Identification Authority of India (UIDAI). Its stated objective is to enable targeted delivery of subsidies, benefits, and services to individuals residing in India, thereby reducing corruption and ensuring that funds reach intended recipients. The law empowers the government to require Aadhaar authentication for receiving benefits from schemes financed by the Consolidated Fund of India, such as the Public Distribution System (PDS), LPG subsidies, and MGNREGA wages. It also establishes the UIDAI as a statutory authority responsible for enrolment, authentication, and data protection. The Act was passed as a money bill, a decision later challenged in court, and it replaced an earlier executive order that had operated without parliamentary sanction.

The Act mandates the issuance of a 12-digit unique identity number linked to an individual's biometric and demographic data, including fingerprints, iris scans, and photograph. It requires authentication for availing subsidies and services, but explicitly prohibits denial of service for lack of Aadhaar if an alternative mechanism is provided. The law also imposes restrictions on the collection and use of authentication data, requiring consent and limiting disclosure except in cases of national security, as determined by a Joint Secretary-level officer. The UIDAI is tasked with maintaining a central database and ensuring the security of personal information. Notably, the Act does not apply to the private sector, and its provisions have been supplemented by subordinate regulations, including the Aadhaar (Authentication) Regulations, 2016, which detail technical and procedural requirements.

In September 2018, a five-judge Constitution Bench of the Supreme Court of India delivered a landmark verdict in Justice K.S. Puttaswamy (Retd.) v. Union of India, upholding the constitutional validity of the Aadhaar Act by a 4:1 majority. The Court recognized privacy as a fundamental right (in a separate 2017 judgment) and applied a proportionality test, concluding that the Act's objectives were legitimate and that the restrictions on privacy were proportionate. However, the Court struck down several provisions: it invalidated Section 57, which allowed private entities to use Aadhaar authentication, and it ruled that Aadhaar could not be made mandatory for school admissions, bank accounts, or mobile connections. The judgment also directed that Aadhaar authentication for welfare schemes must be accompanied by alternative means to prevent exclusion. The dissenting opinion by Justice D.Y. Chandrachud argued that the Act failed the proportionality test and posed risks to civil liberties.

Beyond the headline rulings, the Act has generated niche legal and technical debates. For instance, the Act's definition of 'authentication' includes both biometric and demographic verification, but the 2018 judgment allowed the use of Aadhaar for 'e-KYC' in the financial sector, leading to a subsequent amendment in 2019 that re-inserted private-sector use through a separate law. Another lesser-known aspect is the 'Aadhaar ecosystem' that includes offline verification mechanisms, such as QR codes and XML files, which were introduced to address privacy concerns. The Act also has extraterritorial implications: it applies to non-resident Indians who hold Aadhaar, and the UIDAI has issued regulations for enrolment of NRIs. Furthermore, the Act's interplay with the Right to Food and other welfare laws has been debated, with critics arguing that it creates exclusion risks for marginalized populations. The government has repeatedly extended deadlines for mandatory Aadhaar linking, reflecting the political and logistical complexities of implementation.

UIDAI

Unique Identification Authority of India, the statutory body that issues Aadhaar numbers and manages the authentication infrastructure.

Authentication

The process of verifying an individual's identity using their Aadhaar number and biometric or demographic information.

Consolidated Fund of India

The main treasury of the Government of India, from which most government spending is drawn.

Proportionality test

A legal standard used to determine whether a restriction on a fundamental right is justified by a legitimate aim and is not excessive.