Unless operational efficiencies in the system are removed, the mandatory EPFO directive to enroll in Aadhar might lead to many headaches

The Government of India announced the Aadhar scheme in 2010 to provide unique identification numbers to ensure that citizens gain efficient access to national schemes. The Aadhar identification can be used for any purpose that seeks to establish the identity of a citizen and covers several government schemes under food and nutrition, employment, education, social security, and healthcare.

Though purposed initially with ensuring that the marginalized and poor of the country gain access to government benefits, the span of the programme gradually evolved to act as a single identification mechanism for individuals who are tied to the fiscal system, including banking, insurance, and government schemes.

Earlier this month, EPFO announced that PF transactions will now come under the ambit of the Aadhar scheme. The EPFO directed all its field staff to mandatorily ask for Aadhar numbers from new members joining the scheme from March 1, 2013 and existing members by June 30. What started out as a voluntary enrolment initiative will now cover a significant majority of the organized workforce of the country that is enrolled under the EPFO scheme.

Trade unions are vehemently opposing the EPFO’s suo moto decision to make it mandatory. The EPFO currently covers over 50 million subscribers. EPFO is currently working on building a national database for issuing all subscribers with unique account numbers to allow an individual to switch jobs without transferring PF accounts while switching jobs. The primary argument of trade unions is that in the event that the PF account gets centralized, the choice of creating an Aadhar number should continue to remain voluntary.

PFO trustee and All India Trade Union Congress Secretary D L Sachdev says that, “EPFO does not need to use Aadhaar number as unique account number of its members. “ In addition to the operational inconvenience of creating Aadhar numbers, this move will not go down very well with both employees and with employers. Here’s why.

Incomplete reach of the scheme

The Times of India recently carried a report stating that Aadhar scheme has not reached many regions in the country and it is unfair to expect that employees in those areas should get themselves enrolled. If the move comes into effect, employees in those areas will be unable to carry out any transactions in their PF accounts even while moving jobs.

The increasing incidences of Aadhar-related fraud

An article published in the daily, Raising Kashmir, reveals that there has been a rising number of Aadhar-related frauds that are being reported. Amidst all the benefits that Aadhar promises to deliver, these incidents have contributed to the shaky confidence in the minds of citizens in the credibility of the scheme.

Limited number of Aadhar centers

Many believe a flood of applications will likely follow this directive, and the limited number of Aadhar centers will be unable to process so many applications. The number of Aadhar centers in the country is hugely disproportionate to the population. For example, Mumbai with a population of over 1 crore has only one Aadhar center. Many in the organized sector feel that this will mean lengthy queues and a massive waste of productivity.

Operational hassles and additional cost for an employer

The EPFO guideline mandates an employer to submit every employee’s enrolment ID (EID) number to the EPFO. The employer, however, cannot issue an EID. What that means is an additional cost for an employer in promoting and pushing the scheme among its employees in order to meet the mandatory requirements.

The EPFO has directed its field staff to collaborate with local authorities and set up camps in industrial areas and other places they find suitable. Analysts believe that the EPFO directive will help workers in various sectors that witness a lot of movement of skilled workers. The move will also likely help contractors and contract workers who frequently move organizations and locations. The success of the Aadhar scheme in the organized sector, therefore, hinges around steps that the Unique Identification Authority of India (UIDAI) will take to ease enrolment and reduce the likelihood of fraud.