Aadhaar two-layer authentication fingerprint
Moody’s has reportedly pointed out that large-scale ID systems like Aadhaar result in certain entities gaining access to a massive amount of sensitive information, increasing the risk of data breaches | Representative image

Biometrics-based ID system like Aadhaar unreliable in hot, humid climate: Moody’s

Moody’s has also flagged concerns about the privacy and security of users in a centralised system

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The reliability of biometric technologies, such as fingerprint and iris scan, as used for identity verification by India’s Aadhaar programme, is questionable in hot, humid climates, according to a report by global rating major Moody’s Investors Service. It has pointed out that, as a result, the unique ID system often results in “service denials”, said a report in The Hindu, citing Moody's.

The government and banks have adopted the Aadhaar-based identification system for a host of services, including direct transfers to beneficiaries of welfare schemes. Even the payments to labourers under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme will be done via an Aadhaar-based payment system. The deadline for the switch is now December 31.

Questionable reliability

The report, titled “Decentralized Finance and Digital Assets”, published on September 21, says Aadhaar is “the world’s largest digital ID program” that allots unique identification numbers to more than 1.2 billion Indian residents using biometric and demographic data.

“The Unique Identification Authority of India (UIDAI) administers Aadhaar, aiming to integrate marginalized groups and expand welfare benefits access,” the report states. However, the “system often results in service denials, and the reliability of biometric technologies, especially for manual laborers in hot, humid climates, is questionable,” it reportedly adds.

User privacy and security

Moody’s has also reportedly flagged concerns about privacy and security of users, too. It has named Aadhaar and a new crypto-based digital identity token called Worldline as two digital ID systems that are unmatched in their scale and innovation. However, it has pointed out that both have “drawn scrutiny, especially concerning privacy and security”.

For instance, Moody’s has pointed out that large-scale ID systems like Aadhaar result in certain entities gaining access to a massive amount of sensitive information, increasing the risk of data breaches. Instead, Moody’s has batted for decentralised ID (DID) systems such as digital wallets. Thes rely on blockchain capabilities, giving users more control over their private data, which can reduce online fraud.

“In a centralized system, a single entity such as a bank, social media platform or government electoral roll controls and manages a user’s identifying credentials and their access to online resources. That entity can dispose of the user’s identity data — name, address and Social Security number, for example — for internal or third-party profiling purposes,” the report has highlighted. This suggests that such systems offer users the least control over their data.

Is DID system better?

A DID system, on the other hand, allows the storage of personal data in the user’s digital wallet. Identity is verified not by a single, centralised institution a decentralised digital ledger, such as a blockchain. This gives users greater control over their privacy and restricts access to personal information by intermediaries, Moody’s explained. It’s the user’s digital wallet that stores and manages the DID instead of a government or another entity.

“In recent years, the spotlight has shifted toward DID as a strategic response to the security and privacy vulnerabilities posed by centralized ID systems like Aadhaar,” the agency noted. Countries like Catalonia, Azerbaijan, and Estonia have successfully used blockchain-based systems to issue digital identities, it said.

However, Moody’s has reportedly admitted that DIDs are also not foolproof. Therefore, it warned that any kind of digital ID system can have negative social repercussions in that they may encourage group identities and foster political divides. “Further polarization of group identities and political affiliations would undermine the goal of a united and diverse digital space,” the report has argued.

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