Aadhaar unreliable in ‘hot, humid’ India: rating agency

Aadhaar unreliable in ‘hot, humid’ India: rating agency


Concerns regarding security and privacy weaknesses in centralized identifying systems, such as India’s Aadhaar scheme, have been raised by major global rating agency Moody’s Investors Service. It was mentioned that the unique ID method frequently leads to “service denials” and that deploying biometric technologies in humid environments is unreliable.

What is the Aadhar card?

  • The Unique Identifying Authority of India (UIDAI) issues the 12-digit identifying number known as the Aadhaar card. Each resident citizen of India is given a different number. The number is created by fusing demographic data, like address and date of birth, with biometric information, including fingerprint and iris scans. 
  • Anywhere in India, an Aadhaar card is accepted as identification and proof of address. Additionally, it is utilized to obtain benefits including receiving government aid, opening a bank account, and more. 
  • The Aadhaar card is a rigid PVC card that is portable and has security features. EAadhhar, mAadhhar, Aadhaar letters, and Aadhaar cards are all equally legitimate forms of Aadhaar.

Who is Moody’s Investor Service?

  •  Moody’s Investors Service is a well-known credit rating organization that evaluates and assigns credit ratings to various institutions and financial instruments, including government bonds, corporate debt, and structured financial products. These grades—which range from Aaa to C—help institutions and investors assess creditworthiness and make wise investment choices. The financial sector as well as regulators frequently evaluate risk and ensure financial stability using Moody’s research.

What are the concerns raised by Moody’s Investor Service?

  • Service Denials: According to Moody’s, the Aadhaar system frequently results in “service denials.” This implies that individuals may experience difficulties accessing welfare benefits and public services because of authentication-related problems.
  • Biometric Reliability: There have been concerns raised about the accuracy of the biometric technologies employed in Aadhaar, such as iris and fingerprint scans. According to Moody, these technologies might not function well in hot and muggy weather, which might be troublesome, especially for manual labourers.
  • Authorization Obstacles: According to the paper, one of the difficulties Aadhaar faces is the burden of obtaining authorization. It can be difficult to get and keep individual authorization.

What are the security concerns raised by Moody’s Investor Service?

  • Data Concentration: In centralized ID systems like Aadhaar, Moody’s voiced concern over the concentration of sensitive information with particular companies. The likelihood of data breaches, which may have dire repercussions for certain people, rises as a result of this concentration of data.
  • Online Fraud: Because user information and credentials are centralized, centralized ID systems may be vulnerable to online fraud. This may result in unauthorized access to and improper use of personal data.

What are the recommendations given by the agency to improve the Aadhaar services?

  • Advantages of DID: DID stands for Decentralized ID Systems.DID systems have several benefits, and Moody suggested them as an alternative to centralized ID schemes like Aadhaar. DID systems, which frequently utilize blockchain technology, provide the following benefits:
    • User Control: DID systems offer users more control over their personal information and identities. Users now have more control over how they manage their login information and access to online resources.
    • Reduced Online Fraud: Online fraud risk is decreased by the decentralized design of DID systems because there is no single point of failure where user data can be compromised.
  • Successful examples: Successful DID system implementations were mentioned in the paper in places including Catalonia, Azerbaijan, and Estonia. Particularly in Estonia, which has adopted Self-Sovereign Identity (SSI) to give citizens total control over their digital identities, public services are completely digitalized.
  • Opposed to Centralized Systems: In centralized systems, user identity data is managed and controlled by a single organization (such as a bank or a government agency). This organization may share or utilize this data internally or with third parties, potentially posing privacy issues. DID systems provide a contrast by allowing consumers more control over their data and lowering the risk of abuse.

What are the impacts that can occur due to the recommended changes of Decentralization?

Positive Changes:

  • Improvements in Privacy and Security: DID systems are made to allow users more control over their personal information and online personas. Lowering the possibility of identity theft and data breaches can improve privacy and security.
  • Reduced Fraud: Since there is no centralized store of sensitive data that might be targeted by cybercriminals, DID systems can reduce online fraud and identity theft.
  • User Empowerment: People now have more control over their digital identities, which gives them more power in many areas of their lives, such as service access, money management, and online interactions.
  • Efficiency and Convenience: DID systems can speed up identity verification procedures, facilitating people’s access to services, opening bank accounts, and taking part in online transactions.
  • Innovation and Access: Decentralized systems can encourage innovation in financial inclusion and digital services, opening up access to marginalized groups.

Negative Changes:

  • Implementation challenges: Changing to a DID system can be difficult and expensive, requiring extensive modifications to current procedures and infrastructure.
  • Technology Obstacles: While blockchain-based DID systems have benefits, they could also encounter technical obstacles such as scalability and interoperability problems.
  • Digital Divide: If not all residents have access to the required technology and connectivity, implementation may widen the digital divide.
  • Regulatory and Legal Considerations: To address concerns about identification, liability, and data protection, DID systems may need new regulatory frameworks and legal considerations.


In conclusion, Moody’s has drawn attention to issues with India’s Aadhaar program, including service denials, biometric dependability, and authorisation challenges. They have also voiced worries about security and privacy related to centralized ID schemes. Moody suggests decentralized identity (DID) systems as an alternative, particularly those built on blockchain technology because they provide users more control over their data and lower the risk of online fraud. The potential advantages of this strategy were demonstrated by citing examples of effective DID implementations in other regions.