Industrial production shrinks fifth month in a row, rate slows to 10.4%

 Industrial production contracted for the fifth consecutive month in July at 10.4 per cent, slower than June's 16.5 per cent.

The rate of contraction did not decline to a single digit as was expected by many experts, which means that economic recovery may be prolonged than was expected earlier.

The fall in industrial production has reduced since April when the metric plunged by a historic 57.6 per cent as the whole month was under lockdown due to the spread of Covid-19.

All the components of the IIP-—mining, manufacturing, and electricity-—contracted, albeit at a smaller magnitude than the previous month, official data showed on Friday.

Manufacturing, which accounts for 78 per cent of the IIP, saw output fall by 11 per cent in July, less than June's 15.9 per cent contraction. Inherent stress in the sector had become visible since March, but reached a peak during April output had fallen by a massive 67.1 per cent.

With manufacturing output continuing to sag, coupled with little signs of a recovery in the following months, the July figures are expected to solidify fears that GDP growth will have a rough drop for the second quarter as well, experts said. The first quarter GDP figures had been witness to an unprecedented 24 per cent contraction.

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“Today's IIP release is consistent with our assessment that a fragmented recovery is underway in Q2FY21, and underscores that it will be a slow grind before the economy reverts to relative normalcy over the next few quarters,” said Aditi Nayar, principal economist at Icra.

Devendra Pant, chief economist at India Ratings, said the sharp recovery witnessed in the months of May and June is now becoming somewhat flattish, partly because of local lockdowns.

Mining activity also fell by 13 per cent, lower than June's 19.8 per cent fall. Meanwhile, electricity generation continued to see a lower decline at 2.5 per cent, down from the relatively modest 10 per cent fall in June, as domestic demand continued rising.

All but two of the 23 sub-sectors within manufacturing posted a year-on-year contraction, same as the previous month. Buoyed by drug exports and orders for sanitizers and protective gear, pharmaceutical production posted a 22 per cent, after 34 per cent growth in the previous month. The only other growth puller, tobacco production, rose 6 per cent.

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The crucial capital goods segment, which denotes investment in industry, contracted by 22.8 per cent in July. With this, production in the category saw its eighteenth consecutive monthly decline. While contractions had moderated to 37.4 per cent in June, the segment had seen production almost wiped out with a 90 per cent fall in April. Policymakers fear that as the government has exhausted its options of opening up even more sectors by easing foreign direct investment flows, capital goods production might take time to recover. Experts added that decline in capital goods will continue to rein high and will be the last to show a change in direction as presently there is less incentive for companies to invest given surplus capacity.

Consumer demand struggles

Consumer durables continued being a major casualty of the pandemic among user-based industries, recording a 23.6 per cent fall, down from June's 35.5 per cent slide. Data from the beginning of the year showed that production of consumer durables was falling even before the Covid-19 crisis, with July being the twelfth month of contraction. Consumer non-durables, which include many essential items, lost its initial growth spurt, registering a 6 per cent rise after June's 14 per cent.

"Going forward, we will continue to see improvement in segments like consumer non-druables including pharma segment. However, a ssutained improvement in other components such as consumer durabls and capital goods will require consumer and business sentiments to imrpove,'' said Rajani Sinha, chief economist at Knight Frank India.

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However, among user-based industries, the biggest pick-up was witnessed in infrastructure goods. The contraction in the segment almost halved for the third month in a row to 10.6 per cent in July, down from 18.8 per cent in June, driven by cement and steel.

Going forward, Madan Sabnavis, chief economist at CARE Ratings expected IIP growth to be negative albeit to a lesser extent in August while September may come closer to zero given the pick-up in human movement which will boost pre-festival sales,.

Nayar said said available indicators for August provide mixed cues, with a base effect-led improvement in sectors such as coal and rail freight, modest recovery in petrol consumption, port cargo traffic and GST e-way bills, juxtaposed with a worsening pace of contraction of electricity generation and diesel consumption.

The government announced the total Index of Industrial Production (IIP) data for the second month, following a 2-month hiatus, but cautioned that comparing the IIP in the post pandemic months with months preceding it would not be appropriate. However, industrial output had begun shrinking even before, falling by 18.6 per cent in March, which saw only seven days of shutdown.

Manufacturing contracts for first time in 2 yrs, pulls down GDP to 6-yr low

The manufacturing sector contracted for the first time in over two years, showed official data released on Friday.
The sector contracted by 1 per cent in the second quarter (July-September period) of this fiscal year, compared to a slow growth of 0.6 per cent in the previous quarter. Growth in the manufacturing sector stood at 6.9 per cent in the same quarter of the previous fiscal year. Manufacturing was the only sector which witnessed a decline in output during this quarter.

It was the manufacturing sector which pulled down the gross domestic product (GDP) growth to over six-year low of 4.5 per cent in the second quarter.
In the first half of this fiscal year, the output in the manufacturing sector fell by 0.2 per cent, compared to a robust growth of 9.4 per cent during the same period last year.
chart
This is the second contraction in the sector on a quarterly basis in the past eight years — since the new GDP series started in 2012-13.
Some analysts blamed poor consumer demand for the slump. “We saw the weakest performance in the manufacturing sector which is a result of a persistent demand slowdown that has resulted in low capacity utilisation for the last 2-3 years,” said D K Srivastava, chief policy advisor at EY.
“Without capacity utilisation, there was no investment demand. As a result of weak demand for consumer products, the manufacturing sector contracted as it has excess capacity but no corresponding demand.”
Experts do not see green shoots in the sector going ahead as the output of eight core industries also fell in October. The core sectors contracted by 5.8 per cent in October, compared to a fall of 5.2 per cent in September, according to the data.
The GDP manufacturing numbers were in tandem with the index of industrial production data. The output in manufacturing had contracted by a sharp 3.9 per cent in September against 1.6 per cent in August.
In fact, of the 23 sub-sectors within manufacturing, 17 had recorded year-on-year contractions in September, up from 15 in the previous month.

India's gold demand fell 32% in Sep quarter on weak sentiment, high prices

India’s gold demand for the July-September 2019 quarter (third quarter, or Q3) declined 32 per cent to 123.9 tonnes, thanks to a weak consumer sentiment and high prices. This was not only the weakest quarterly gold demand since the June quarter of 2016, but also one of the weakest third quarters since 2005. Worse, a large part of the jewellery demand during the quarter was met by sale of old jewellery. The demand for investment in gold also fell during Q3 — by 35 per cent year-on-year to 22.3 tonnes.
The World Gold Council Gold Demand Trend report, released on Tuesday, said: “Indian consumers preferred gold-to-gold exchanges, which accounted for an average 50-60 per cent of purchases, while retailers wound down existing stocks.” Old gold sold without exchange was also 59 per cent higher in the quarter to 36.5 tonnes. India’s gold supply from domestic sources, at 120 tonnes, might set a new record on an annualised basis; the previous record was 118 tonnes in 2012.

For full 2019 calendar year, the WGC downgraded its India gold demand forecast to around 700 tonnes, compared with 760 tonnes last year.
Interestingly, in the first nine months of the year (January-September), India’s reported cumulative gold demand was down only marginally— by 5.3 per cent to 493 tonnes, compared with 523.9 tonnes during the same period last year.
Besides India, China also saw a decline in gold demand — of 25 per cent to 199.1 tones. The overall gold demand was supported mostly by institutional investors who buy exchange-traded product.
“Gold demand in India declined by 32 per cent in the third quarter of the current calendar year, primarily due to a weak consumer sentiment and high prices. Despite a step-up in buying during Akshaya Tritiya in the second quarter, the absence of any major festivals, monsoon and intervening inauspicious period like pitru-paksha led to the muted gold demand in India during the July-September quarter,” said Somasundaram PR, WGC’s managing director for India, while releasing the council’s Q3 Gold demand trend report today.
The WGC attributed the sharp decline in India’s gold demand to a generally low consumer confidence amid talks of an economic slowdown and lack of a secular trend in price movements.
India’s cumulative gold import declined by a massive 66 per cent to 80.5 tonnes during July-September 2019, against 236.8 tonnes in the same period last year. Import of unrefined or dore gold was down 90 per cent to just 6.7 tonnes. WGC attributed lower imports to an estimated 220 tonnes of imported gold lying in the system with nominated agencies, bullion dealers or jewellers.
Most Indian refineries have shut shop due to negative margins on processing of dore. There were many occasions when the gold price was trading at a massive discount of $15 per 10g.

Hottest July ever! 65% Indians were exposed to heatwaves in May-June 2019

July 2019 was the hottest July ever in recorded Indian meteorological history, and 65.12% of India's population was exposed to temperatures of over 40 deg C between May and June, 2019, the most widespread over four years, according to a new analysis.
In 2016, 59.32% of India's population faced a heatwave, the number rose to 61.4% in 2017 and fell to 52.94% in 2018, according to an analysis done for IndiaSpend by Raj Bhagat Palanichamy, an earth observation expert at the World Resource Institute (WRI) in India.

It was only in 2016 that satellite data improved enough to yield such a detailed analysis, according to Palanichamy. But 2015 saw the worst heatwave in India since 1992, striking areas from Delhi to Telangana and killing 2,081 people. It was the fifth deadliest in world history.
On June 25, 2019, temperatures were as much as 5.1 deg C above normal in parts of Jharkhand, Assam and Meghalaya, according to the India Meteorological Department (IMD) which classified this as “markedly above normal”. Temperatures were 3.1 deg C above normal in the sub-Himalayan West Bengal and Sikkim or, as IMD put it, “appreciably above normal”.
Global temperature records were broken during the summer of 2019, with the July temperature 1.2 deg C above the pre-industrial era, according to the latest data from the World Meteorological Organization (WMO) and the Copernicus Climate Change Programme, the European Union’s Earth Observation Programme.
As global CO2 (carbon dioxide) emissions continue to rise, heatwaves are likely to become more frequent, and more intense, according to the October 2018 report by the Intergovernmental Panel on Climate Change (IPCC), the UN body set up to assess science related to climate change. The consequences will be deadly.
India will see a four-fold rise in heatwaves if global temperature rise is restricted to 1.5 deg C by the turn of this century, according to a November 2018 study by Indian Institute of Technology-Gandhinagar researchers. If the world fails to contain global temperature rise, India could see an eight-fold rise in heatwaves.
This can lead to a rise in both morbidity and mortality. Heatwaves can cause the body’s core temperature to increase. Limited exposure can lead to dehydration and dizziness but high exposure to heatwaves could lead multiple organs to dysfunction causing death within hours, studies suggest.
Between 2010 and 2018, 6,167 heat-related deaths were reported in India, as IndiaSpend reported in April 2019. The year 2015 reported the most fatalities: 2,081 or 34% of all heat-related deaths in that time period.
In 2019, 94 deaths were reported till June 16, according to a government statement to the Lok Sabha, parliament’s lower house. This number rose to 210 by the end of June, with the most (118) deaths being reported from Bihar.
“A vast majority of deaths during a heatwave period are registered as normal deaths (from cardiorespiratory arrest etc) or might never be medically declared/certified heatwave deaths,” said Gulrez Azhar, an epidemiologist and researcher who studied heatwave deaths in Gujarat for four years while at the Indian Institute of Public Health (IIPH), Gandhinagar. “But those deaths would not have happened had it not been so hot.”
Along with day-time temperatures, night-time heat is rising as well.
“Most of the time we are focussed on looking at day-time heatwaves,” said Vimal Mishra, associate professor at IIT-Gandhinagar, who co-authored the study and focuses on climate change research. “Cooler nights give some relief. But think about a scenario where both days and nights are hot.”
These relentlessly hot days and nights are what his study predicts will become commonplace in coming years.
But India is not an exception.
Record temperatures across the globe and human influence

Global average temperatures for the month of July were close to 1.2 deg C above the pre-industrial level as defined by the Intergovernmental Panel on Climate Change, according to the Copernicus Climate Change Service (C3S).
Geneva, the capital of Switzerland, surrounded by the snow-clad Alps, reported an unusually warm summer this July. Temperatures reached up to 36 deg C, well above the average day-time temperature of 24 deg C for the month, and the Swiss government had to issue a rare level-4 heat alert indicating ‘severe danger’ from the heat.
France’s capital Paris hit 42.6 deg C on July 25, an all-time high compared to the July average of 24 deg C. United Kingdom’s capital London too recorded a temperature of 34 deg C against its July average of 22 deg C. Officials in Belgium issued a warning after the death of a 66-year-old woman was attributed to the heatwave.
The US too is bracing for record high temperatures across the country.

WMO | OMM
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July 2019 has at least equaled, if not broken, the record for the hottest month since data collection began.
It’s a month marked by a #heatwave that saw #climate history rewritten.
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READ MORE ▶️http://bit.ly/2Yx8zJ8
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Greenland, a country where ice glaciers cover 82% of surface area, lost over 10 billion tonnes of ice on July 31, 2019. To put it in perspective, 1 billion tonne is equivalent to 400,000 Olympic-sized swimming pools. This also means that global sea levels will go further up.

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From @thetimes:
"A melt of Greenland’s ice sheet is pushing up sea levels [...] At least 100 “intense and long-lived fires” tore through the Arctic in June and early July, according to the #Copernicus #Atmosphere Monitoring Service (CAMS)."
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The average global temperature for the previous month--June 2019--was the highest in recorded history as well. It was 0.1 deg C higher than in June 2016, which had held the record of being the warmest so far.
Human activity to be blamed
The science on the rising frequency and intensity of heatwaves is clear: human activity is to be blamed. Since the first such study in 2004, advances in attribution science have confirmed that human influence has made heatwaves more likely.
But linking a particular extreme weather event to climate change is tricky, said Freja Vamborg, senior scientist, Copernicus Climate Change Service (C3S). “To do such studies you need very good observational data for a long time back,” she said. “In some parts of the world such studies could be difficult as the observational data might not be homogenous.”
What is a given, according to Vamborg, is that such heatwaves are likely to be the norm in the coming years.
A heatwave, as we mentioned, is not about crossing a particular temperature level but how much it exceeds the average temperature of a particular place. In northern India, for example, a heatwave would warrant temperatures above 40 deg C but in Switzerland this would be 29 deg C and above.
However, in places that routinely deal with high temperatures, people develop different kinds of coping mechanism. But in regions used to temperate summers, people are unprepared for heatwaves. France alone has reported five heatwave deaths so far.
But even in India, used to hot summers, some areas could well become unlivable with a further rise in temperature, according to experts.
If CO2 emissions are not contained, then India, Pakistan and Bangladesh would be swept by deadly heatwaves in the next few decades, said a 2017 study by researchers at the Massachusetts Institute of Technology (MIT).
The impact would be especially severe in the Indo-Gangetic plain, the study said.

Upto 37% of Indians were exposed to high temperatures (air temperature) of over 40 deg C for 10 hours or more in a day in 2019, up from 27.42% in 2018, according to satellite data.
Data: GFS Temperature Estimates, GPWv4, MODIS (LPDAAC - NASA); Processed by Raj Bhagat Palanichamy using Google Earth Engine.
The heatwave-climate change link
Globally, CO2 emissions continue to rise and, of this, in 2017 nearly 7% came from India, up from 6% in 2016, according to a December 2018 report from the Global Carbon Project, a collaborative effort between several research institutes to quantify global greenhouse-gas emissions.
Being a greenhouse gas, CO2 traps the sun's heat, pushing up land surface temperatures. Higher than normal temperatures lead to heatwaves. So, the connection between climate change and heatwave is a direct one.
“We know that all the land surface areas--there are hardly any exceptions--have seen an increase in temperatures over the past 150 years,” said Vamborg. “Some areas warm faster and some areas warm slower.”
This relationship between rising temperatures and heatwaves is also non-linear. “What it means is this: If without a (global) increase in temperature you have five heatwaves in 10 years then, with a temperature rise of half a deg C you will have seven heatwaves in 10 years,” explained Mishra of IIT-Gandhinagar. “And if the temperature rises by 1 deg C then all of a sudden there could be 20 heatwaves in five years.”
But the impact of global temperature changes will vary across the globe. And rising humidity levels will be a factor in this.
“Air can hold up to 7% more moisture for every degree celsius rise in temperature,” said Krishna AchutaRao of the Centre for Atmospheric Sciences, Indian Institute of Technology (IIT) - Delhi. Thus in coastal cities, where the air tends to be moist, humidity levels will rise with a rise in temperature. “When humidity is high the sweat stays on the body and there is no cooling effect,” said AchutaRao. “That is why the heat during monsoon feels more oppressive.”
While IMD takes into account only temperature rise when declaring a heatwave, scientists suggested a heat index that takes into account both temperature rise and humidity.
Damage from heatwaves
Depending on how much the temperature has risen, for how long and over how much land, a heatwave can impact human life in different ways.
“You may have intense heatwave in one year but it may be very localised as we witnessed in 2015 (in India),” said Mishra of IIT-Gandhinagar. “But this year’s heatwave covered almost two-thirds of the country. So, if the intensity of the heatwave is the same but the area covered is two to three times more, we can expect more damage.”
If no effort is made to adapt to these heatwaves, they could cause more deaths; but the fatalities would vary across areas, according to a 2018 study of 20 regions across the world published in the health journal PLOS. The highest increase in deaths could be in Colombia, followed by the Philippines and Brazil, the study said. Tropical and subtropical regions, including India, would see a rise in deaths.
Heatwaves have been linked to pre-term births, reduced fertility, increase in mental health issues, increase in farmer suicide rates in India and chronic kidney diseases.

India is among the top 20 countries in the world to have seen the most number of extreme weather events between 1998 and 2017, according to a 2019 report by a German non-profit that tracks climate risk.
While pregnant women, the elderly, and children are particularly vulnerable, those affected will disproportionately be the ones without the means to escape the heat.
“The exposure to heat is related to economic class,” said Shoibal Chakravarty, a fellow at the Centre for Environment and Development, Ashoka Trust for Ecology and Environment or ATREE. “It essentially has to do with who is so poor that you have to continue working in the heat.”
Those working in the informal sector, especially vulnerable daily wagers, are most likely to be affected by heatwaves, according to Chakravarty, who studies equity in the context of climate change. In India, of around 61 million jobs created over 22 years since the liberalisation of the economy in 1991, 92% were informal jobs, according to an IndiaSpend analysis of National Sample Survey Office (NSSO) data for 2011-12, the latest available, released in 2014.
This year 37% of the population was exposed to air temperature of over 40 deg C for 10 hours or more a day, according to the analysis by Palanichamy of WRI for IndiaSpend, highest in the past four years. In 2016, this number stood at 31.79%, rising to 34.19% in 2017 and falling to 27.42% in 2018.
Heatwaves also bring down productivity, according to initial results from an ongoing India-centric study at the Energy Policy Institute of the University of Chicago. Productivity declines by 2-4% with every deg C rise in temperature.

Laurie Garrett
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This is a roaring glacial melt, under the bridge to Kangerlussiauq, Greenland where it's 22C today and Danish officials say 12 billions tons of ice melted in 24 hours, yesterday.
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Parts of Greenland has seen temperatures 10 to 15 deg C above normal causing glaciers to melt, according to the World Meteorological Organization.
Is air pollution masking impact of heatwaves?
India is experiencing fewer heatwaves than projected by climate models, said a study co-authored by AchutaRao.
As climate change takes hold, the expectation is that extreme temperatures--the maximum temperature on the hottest day of each year in a region--would keep rising.
“In all the studies in the US, Russia and Europe that has happened, but not in India,” said AchutaRao of IIT-Delhi. “But that hasn’t happened in India. They’ve been flat and, in some places, even declined.”
Scientists suspect that this can be traced to two factors: air pollution and irrigation. If India were to clean up its air, thus erasing the elements that block sunlight, heat levels are likely to go up, said AchutaRao. What is unclear is exactly how much the heatwaves will go up once pollution is taken out of the picture.
Air pollution is caused not just by the presence of gases but also aerosols (solid or liquid particles in the air). Some aerosols have a warming effect while others have a cooling one, as explained in an IndiaSpend story in May 2019. This means that depending on the nature of local pollution, humidity levels and surface water bodies, different areas will experience either a rise or fall in heat levels when that pollution clears.
Irrigation tends to have a cooling effect on the land. But this effect is small and localised. “Heatwaves occur in summer and most of the crops are gone by that time,” said Mishra of IIT-Gandhinagar.
The way forward
Preparing for the future will involve two steps: mitigation and adaptation. “In terms of mitigating future heatwaves, the only way that the future heatwaves can be controlled is by controlling CO2 emissions,” said AchutaRao. This would involve a global effort.
Focus on renewables to reduce CO2 emissions and protecting existing forests are other crucial mitigation measures. Adaptation would involve better urban planning with a focus on more tree cover and increasing surface water bodies that tend to have a localised cooling effect.
“An integrated approach to climate change and at least the management of heat and cooling in the country is required,” said Chakravarty from ATREE. Even after all these measures, “heatwaves would still happen but their impact would be reduced”.
Republished with permission from IndiaSpend. You can read the original article here

Boon for some, bane for others: Aadhaar faces an identity crisis in India

Last July, after virtually every adult in India was connected to the world’s biggest biometric identity database, one of the government officials behind it issued a challenge. R.S. Sharma, who oversees the country’s telecom regulatory agency, publicly disclosed his personal ID number in the system and taunted skeptics and potential hackers. “Show me one concrete example where you can do any harm to me!” he tweeted.
Opponents of the system swarmed, looking to show the dangers of having too much information amassed in one place. They scoured the internet for Mr. Sharma’s personal data by using the ID number to help open digital doors, and claimed some prizes: They uncovered his mobile number and a photo of his daughter and were able to deposit token amounts of money in his bank account. But they couldn’t withdraw funds or corrupt his data, and Mr. Sharma claimed to have proved that the system—which has on file the irises and fingerprints of all of its participants—is secure.

Mr. Sharma’s challenge reflects the tensions over India’s unique feat. It has reached near-completion just as objections to such giant concentrations of personal data have escalated elsewhere around the world, fueled by controversies surrounding Facebook and Google. Reetika Khera, an economist at the Indian Institute of Management Ahmedabad, calls the Indian system “big data meets big brother,” and she and others have aired what they see as its failings, from invasive information-gathering about those within it to dangerous consequences for stragglers left out.
India says its system—built to cover its 1.3 billion people, a sixth of the world’s population—heralds a new model for governments to marshal citizens’ data, ease digital pathways and fuel their electronic economies, especially in the developing world. India’s Supreme Court in September ruled that the program doesn’t violate citizens’ privacy rights, removing a huge shadow over the program. “It’s mind-boggling that a country like India has pulled it off,” said Anil Jain, a Michigan State University professor who studies biometrics.
The program—named Aadhaar, the Hindi word for foundation—began signing up users in 2010 but took several years to roll out to almost all Indians. The program’s chief aim is to eliminate corruption rife in the distribution of welfare benefits such as cash transfers and subsidized rice, so India’s poor get the benefits instead of illegal middlemen. It is also designed to make it easier for the masses to sign up for bank accounts and mobile phone plans, and to make payments via smartphones.
India’s citizens, large percentages of whom are illiterate and lack toilets or electricity in their homes, visit government centers and banks to enroll. They peer into eye scanners that resemble night-vision goggles and have their fingerprints digitized on special pads connected to computers. That information, along with their photos and other basic personal details, are uploaded to the Aadhaar database, and applicants are given unique 12-digit numbers matched to their data. They must use those to receive government benefits, for instance to collect subsidized sugar from shops. The shops scan their fingerprints on inexpensive readers and seek clearance from Aadhaar.
Hundreds of millions of Indians lack birth certificates or other reliable documentation of their identity, so Aadhaar is the first form of legitimate ID many possess. Indian Finance Minister Arun Jaitley says the country is saving $12.5 billion annually in waste from fraud and bureaucratic errors, many times the $1.6 billion the database cost to build. “Everyone must realize, including critics of Aadhaar, that you can’t defy technology or ignore it,” Mr. Jaitley has said.
Mohammed Akhtar is one Aadhaar beneficiary. The 26-year-old autorickshaw driver earns about $95 a month. He lives with his wife and three daughters in a one-room shack in a dusty New Delhi slum that is thick with flies. The family recently got electricity but has no running water or bathroom. Mr. Akhtar moved to New Delhi several years ago from Bihar, one of India’s poorest states, lacking any documents that could prove who he was.
“Aadhaar has helped me,” he said one recent morning, standing outside his door. “Earlier I had nothing.” Since getting his Aadhaar number two years ago, he has opened his first bank account and registered for mobile service for his first phone. Many banks and telecoms traditionally have required reams of paperwork to prevent fraud, such as birth certificates, proof of address and even documentation about relatives. Mr. Akhtar had none of these, but his Aadhaar ID allowed him to sign up for them in minutes. He and his family are unconcerned about potential hacks of their data: compared with richer Indians, he said, “We are not worried because we have nothing to lose.”
Governments differ greatly over whether and how to use masses of digital information. China sees data as a tool to surveil and control its citizens but hasn’t attempted a biometric network as expansive as India’s. China has national ID cards that include facial data and in some cases fingerprint details, but not iris scans. It uses facial-recognition technology in some train stations and more broadly in the autonomous region of Xinjiang to help control the Muslim population there. In the U.S., there is no national project to collect citizens’ biometric details. The European Union has focused on sweeping measures to protect individuals’ private data from what it sees as corporate abuse.
Nandan Nilekani, the billionaire founder of Indian IT services giant Infosys Ltd. and the program’s original chairman, calls Aadhaar the modern equivalent of the U.S. instituting Social Security numbers in 1936. He likens the government funding to U.S. federal investments in the interstate highway system and in research projects that led to GPS and the internet.
But Aadhaar’s many detractors see it as unnecessarily invasive, creating a huge security liability and a massive overreach by the government into citizens’ privacy. “If they get breached or the data is stolen, what are you going to do—create a new iris, a new fingerprint?” said George Avetisov, chief executive of the New York-based biometric computer security firm HYPR Corp. Such fears have spurred continuing efforts to demonstrate the system’s flaws. One group of holdouts maintains an online map of “Aadhaar Fails,” chronicling snafus such as enrollments failing in remote areas where mobile connections are patchy. A local newspaper reported that it was able to gain access to Aadhaar by purchasing login details from someone who may have worked to enroll users.
Some opponents point to cases in which India’s most destitute lost their benefits because they couldn’t transition to Aadhaar; those include people who are homebound or whose fingerprints have worn off from decades of manual labor. Ms. Khera, the economist, found in studying rural distribution of welfare benefits that 33 of 61 starvation deaths since 2016 were people either unable to enroll in Aadhaar or whose benefits were cut. Government officials have disputed that, saying the deaths were from illnesses and not starvation.
Critics also say Aadhaar has been subject to monumental mission creep. It has morphed, they say, from a voluntary program distributing benefits to the poor to one that is effectively required for many facets of daily life. Some schools, for example, have required children to have Aadhaar IDs in order to enroll. Many local governments and businesses now demand Aadhaar numbers for obtaining marriage certificates, purchasing train tickets and even for gaining entrance to cricket matches, in addition to getting bank accounts and phones.
A recent visit to an enrollment center at a bank in New Delhi yielded examples of Aadhaar’s potential benefits—and its pervasive reach. Shajita Parvez and her husband, for instance, stood at the end of a line snaking toward a desk in a corner, where a man was snapping photos and scanning applicants’ eyes and fingers. Ms. Parvez, who is 23 years old and seven months pregnant, said she was forced to sign up for Aadhaar after several hospitals rejected her effort to get an ultrasound examination without an ID number, even though her husband was enrolled.
Reached a few weeks later, Ms. Parvez said she had been able to obtain necessary treatment, and now planned to use her new Aadhaar number to get subsidized cooking gas as well as a connection for her first smartphone in time for her baby to arrive. “I will need to stay in touch with my husband all the time,” she said.