Context
According to a Moody's Investor Service research titled "Decentralised Finance and Digital Assets," decentralised digital identity solutions are preferred to centralised biometric ones like India's Aadhaar.
The Indian government-maintained Aadhaar programme is criticised in the document for having security and privacy issues and for being ineffective.
  
How Significant Is Aadhaar?
·         The Unique Identity Authority of India (UIDAI), which administers Aadhaar, provides residents of India with a unique identity number. During enrollment, biometric data including fingerprint and iris scans are collected in addition to demographic data. 
·         The primary goals of UIDAI are to provide each resident with a unique ID, combat corruption in the distribution of assistance programmes, and eliminate phoney beneficiaries.

The Welfare Programmes and Aadhaar  
The government has integrated Aadhaar into a number of government-to-citizen cash transfer systems, resulting in considerable cost savings, to address the issue of ghost beneficiaries and reduce duplications.
·         Paranormal Beneficiaries: One of the primary motivations for integrating Aadhaar was to eliminate "ghost" beneficiaries—those who erroneously receive benefits in the identities of deceased or fictional individuals.
·         Savings on costs: The adoption of Aadhaar in welfare programmes has reduced fraudulent or duplicate claims and improved resource allocation, which has led to a large cost saving.

Cash withdrawals with Aadhaar:  
Cash transfers must be made possible using Aadhaar. For MGNREGA payments to be made using Aadhaar, the Aadhaar numbers of the employees must be linked to their bank accounts and employment cards. When withdrawing money via the Aadhaar-enabled Payment System (AePS), biometric authentication is possible.

Concerns Associated with Aadhaar  
·         Quantity Fraud: Aadhaar is criticised for failing to address issues like quantity fraud, in which beneficiaries receive less than they are legally entitled to. Even now, corruption of this kind is pervasive, and Aadhaar cannot stop it.
·         Authentication problems, such as fading fingerprints, weak phone connectivity for OTPs, and erratic internet access in rural areas. Those with impairments and elderly women are two groups that are at danger of exclusion.
·         Lack of Data Transparency: Lack of public access to information regarding authentication attempts and failures hinders transparency.
·         Payment Errors: Payment mistakes can happen at any point in the Aadhaar-based payment process. If there are data mismatches between the databases for job cards and Aadhaar, authentication issues may happen.

What should be done:  
·         Invest in R&D to improve the reliability of biometric technologies, particularly in challenging environmental conditions like hot, humid climates. 
·         The use of mandatory Aadhaar must be restricted to legitimate goals, and the government must provide workable fallbacks in the case that Aadhaar authentication is failed.Benefits shouldn't abruptly end or be temporarily suspended. Give those who are concerned the chance to speak or appeal.
·         Under rigorous supervision, the UIDAI must ensure that everyone can enrol, update, and reclaim a lost card more quickly, for free, at the block level or lower.
·         It is essential to conduct a detailed review of the Aadhaar Payment Bridge System and direct benefit transfer.

Conclusion  
There is no doubting that Aadhaar has increased the transparency and efficiency of aid projects, yet problems remain as a result of its implementation. A balance between security, usefulness, and reliability is essential to ensure that Aadhaar continues to benefit the individuals it was created to assist. The effectiveness of Aadhaar in government aid programmes can be increased while safeguarding the rights and privacy of citizens by solving these problems.
 
LTX Mains Question
Q. What problems and challenges do social programmes have with using Aadhaar, and how could those problems and issues be resolved while protecting citizens' right to privacy?