Thursday, November 15, 2012

The IRR of UIDAI is over 50 per cent in real terms

We have released a cost-benefit analysis of the UID system. In one line, the result of the calculations, under fairly conservative assumptions, is that the IRR of building the system is 53% in real terms. Hence, building UIDAI is a pretty good use of public money.

Through this page, you can access a short and accessible explanation, a video presentation, and the full PDF paper. We have also released the spreadsheet used in our calculations, so that others can modify the assumptions or other numerical values, and obtain alternative answers.

This is true in the Indian case. Is it true in general? I feel the answer depends on (a) The scale of expenditure on subsidy programs and (b) The extent to which present implementation systems suffer from the kinds of leakages that UID readily addresses (multiple payments to one person, payments to ghosts). If a country has small welfare programs, that would undermine the case for UIDAI. If a country is doing a pretty good job of paying out subsidies through conventional procedures, that would undermine the case for UIDAI.


  1. Although your article is about IRR of Aadhar...I as an ordinary citizen am more concerned that it has not hit critical mass in terms of its acceptance.

    I am quite bothered about KYC and additional KYC in context of MF investments
    and in context that we have become a nation of "please submit a photo, a Pan card copy and address proof...all self-attested" for anything under the it change in a/c, new a/c...for banks, MF etc

    Correct me, but I had imagined that Aadhar would be a one-stop solution to ALL these problems
    but, none of the banks. MFs will take Aadhar and just use that data

    why are we always re-inventing the wheel, and creating so much paperwork hassles for common Indian people ?

  2. Tax evasion is equally important besides the leakage in subsidies. Linking UID with PAN card, bank accounts, property registration etc. can help improve tax collection efficiencies.

  3. The UID is a future investment not just replacement in the current subsidy scheme, but the benefits of unique identification are far too many.

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