India’s identity project Aadhaar will return $13 billion in net benefits in 11 years

The investment made on the Aadhaar project which aims to give every Indian a unique identification number could yield an internal rate of return of 52.85 % to the government, according to a new study. Assuming that the government spends Rs 37,187 crore on the project and integrating it with various schemes over 11 years starting from 2010-11, it will get a net benefit of Rs 72,620 crore (about $13 billion) over 11 years, the study said.

Cost Benefit Analysis of Aadhaar (Rs cr)

The cost benefit analysis by National Institute of Public Finance and Policy (NIPFP) says that the rate was arrived at taking all costs into account and making modest assumptions about leakages.

The unique identification project is one of the most ambitious technology projects the government had undertaken in its previous term. Former Infosys top boss Nandan Nilekani was roped into the government to execute the massive project.

Researchers considered a time period of 11 years between 2010-11 to 2020-21. Aadhaar can improve labor mobility and empower beneficiaries with methods to pressure the system to work better, they said. It can be hard to quantify such benefits, thus the study focuses on tangible benefits.

The costs and benefits to the government will come from Aadhaar integration of schemes such as MNREGS, PDS, Fertiliser and LPG schemes. Leakages in the system can be plugged using Aadhar based mechanisms. More on the study here.