The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016.

Summary of the Aadhaar Act, 2016
Purpose
• To provide for targeted delivery of subsidies, benefits, and services by assigning unique identity numbers to residents in India, with recent updates focusing on enhanced security, privacy, and verification processes.
Key Definitions & Updates
• Aadhaar Number: Unique ID issued to an individual.
• Authentication: Process of verifying an individual's Aadhaar number, with offline verification now emphasized for privacy.
• Central Identities Data Repository (CIDR): Central database, with strengthened security measures implied through recent amendments.
• "Specified Transaction": Introduced for enhanced due diligence, including high-value cash transactions, foreign exchange, and high-risk money laundering scenarios.
Structure and Key Provisions
1. Authentication and Verification Methods
• Clause (a): Aadhaar authentication with privacy safeguards.
• Alternatives: Offline verification, passport, and other officially valid documents.
• Voluntary Choice: Emphasized, with no service denial for lacking Aadhaar.
2. Enhanced Due Diligence
• Pre-Transaction Verification: For specified high-risk or high-value transactions.
• Additional Steps: Examining ownership, financial position, and transaction purpose.
• Non-Compliance: Transaction prohibition if conditions not met.
3. Record Maintenance and Confidentiality
• Transaction Records: Maintained for 5 years.
• Client Information: Stored for 5 years after the relationship ends.
• Confidentiality: Mandated, with exceptions for legal requirements.
4. Access to Information and Enhanced Safeguards
• Director's Access Rights: To records for the Act's purposes.
• Additional Safeguards: At the Central Government's discretion for verification.
Notable Updates and Provisions
• Strengthened Privacy Measures: No storage of core biometric information or Aadhaar number post-authentication/offline verification.
• Specified Transactions: Enhanced scrutiny for high-value or suspicious transactions.
• Voluntary Aadhaar Use: Reiterated, ensuring privacy and choice.

Legislative History:

The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016

Short Title - The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016

Act Number / Year - Act No. 18 of 2016

India Code Act ID - 201618

Introduced In - Parliament (Lok Sabha)

Presidential Assent Date - March 25, 2016

Official Gazette Publication - March 26, 2016

Enforcement Date - September 12, 2016

Nodal Ministry - Ministry of Electronics and Information Technology (MeitY)

Precedent & Statutory Rationale

1. Transition from Executive Order to Statutory Backing:

o Prior to 2016, the UIDAI functioned purely as an attached office under the administrative control of the Planning Commission (later NITI Aayog) via an executive notification. The absence of a governing parliamentary statute created legal ambiguities regarding data collection, privacy safeguards, and the mandatory linkage of identity credentials for public welfare schemes.

2. Efficiency, Transparency, and Leakage Prevention in Welfare Delivery:

o Grounded in national governance goals to plug structural leakages in state-sponsored welfare, the legislation was enacted to legally mandate the use of unique identity credentials for the targeted delivery of subsidies, benefits, and services funded directly from the Consolidated Fund of India.

Parliamentary Trajectory & Enactment

• Formulation: Developed and piloted by the Union Government to provide a comprehensive legal framework for digital identification, authentication architecture, and data protection.

• Parliamentary Passage: Introduced in the Lok Sabha by Finance Minister Arun Jaitley on March 3, 2016. Because it was designated as a Money Bill under Article 110 of the Constitution—focusing on expenditures drawn from the Consolidated Fund of India—it bypassed the requirement of formal concurrence from the Rajya Sabha, ultimately securing parliamentary passage in March 2016.

• Presidential Assent: Received formal Presidential Assent on March 25, 2016, entering the statute book as Act No. 18 of 2016.

Source: India Code Official Repository and Unique Identification Authority of India (UIDAI) Official Records