India transforming public finance with digital identity and biometrics

India has implemented substantial digital initiatives to streamline pension verification and welfare benefit distribution. The digital life certificate system and Direct Benefit Transfer (DBT) program produce measurable outcomes regarding efficiency and fraud reduction. The programs build on India’s better push for digital identity verification, which began with establishing the Unique Identification Authority of India (UIDAI) and its biometric-based national ID system.

The digital life certificate system permits pensioners to submit their life certificates using facial recognition technology on Android smartphones. Throughout November 2024, the Department of Pension and Pensioners’ Welfare implemented Campaign 3.0, expanding the initiative’s reach to 800 cities and towns across all districts. This implementation follows the successful deployment of facial recognition for pension verification in other countries, exemplifying a growing global trend of installing biometric technology for social security management.

The CFO news reported that in the Finance Ministry Year Review 2024, the Indian Finance Ministry stressed how the DBT system, integrated with the Public Financial Management System (PFMS), contributes to the Digital India initiative. This IT-based infrastructure enables digital payments and receipts for ministries and departments across the federal and state governments, resulting in increased transparency and accountability.

The PFMS is a key player that enables real-time tracking of fund disbursements, from release to credit to beneficiaries’ bank accounts. This technique significantly streamlines trust in timely cash transfers, especially for centrally funded and sector-specific initiatives. The system ensures that only genuine beneficiaries have access to welfare payments by implementing Aadhaar-linked biometric authentication, hence eliminating ghost accounts and fraudulent claims.

Finance Minister Nirmala Sitharaman stated through her social media on X that more than $450 billion has been transferred through DBT in the last eight years. She ascribed this achievement to the elimination of middlemen, which resulted in savings of nearly $40 billion from possible pilferage. This achievement emphasizes the importance of integrating biometrics and Aadhaar-enabled digital identity into India’s digital public infrastructure.

Table of Contents

A paradigm shift in governance and financial inclusion

The DBT project demonstrates India’s commitment to promoting financial inclusion and improving governance through digital transformation. Beneficiaries of numerous schemes, such as subsidies, pensions, and scholarships, receive payments directly to their Aadhaar-linked bank accounts. This decreases delays and assures that funds reach their intended recipients without intermediaries.

The Finance Minister of India further defined this project as a superb lesson in efficient governance, highlighting the importance of accounting for every rupee properly. With the integration of biometric technologies and digital identities, India’s digital public infrastructure establishes a global standard for transparency and effective fund administration, increasing trust in government services. India highlights how a strong digital public infrastructure can adjust lives, encourage accountability, and provide fair access to welfare services by utilizing biometrics and Aadhaar.

Moreover, states like Karnataka are using the DBT framework, which is supported by Aadhaar biometric authentication, to innovate public distribution systems, such as cash transfers in place of food rations. The linking of ration cards to Aadhaar is also being pushed in places such as West Bengal to streamline access to food assistance and reduce leakages.