The government has unjustifiably taken its fixation with Aadhaar to one more important area of people's lives. The Insurance Regulatory and Development Authority of India (IRDA) last week announced that insurance policies had to be mandatorily linked to Aadhaar. This is unfair and has no good reason, and will not give any particular advantage to insurers or the government. Nor will it help policy-holders. It will certainly be another hassle for them and will again raise issues of privacy as in many other areas where the government is extending the reach of Aadhaar. The IRDA had announced two months ago that the linkage is voluntary but has suddenly shifted its position. It has now instructed all insurers to comply with the new norms.
The argument for linking Aadhaar with insurance policies is not convincing. An insurance policy is a contract and introducing a new condition into the contract unilaterally is not right and might even be challenged legally. If there was no Aadhaar requirement at the time of buying a policy, it is wrong to introduce it later. India's major insurer, Life Insurance Corporation of India (LIC), and other insurers have worked efficiently without Aadhaar. Unlike in some areas of financial transactions like real estate, there is no scope for tax evasion in insurance as all transactions are recorded and payouts are made into bank accounts. If the government wants to investigate individuals for tax evasion or other financial malfeasance there are investigative agencies to do so. Aadhaar will in no way increase the genuineness or traceability of the transactions nor the operational efficiency of the insurers. Since the decision has come into immediate effect, payment of premiums or claims may not be allowed without Aadhaar linkage. This will cause inconvenience and difficulties in many cases.
The legal and constitutional validity of Aadhaar is still not clear. The Supreme Court is yet to give its decision on it and has told the government it can be mandatory only for the delivery of essential services. But the government couldn't care less. It wants to peek into every aspect of the lives of the entire population by linking Aadhaar to everything in order to identify suspected tax evasion by a few. The linkage with insurance policies is one more example of this attitude. Under UPA, Aadhaar was meant to give an identity document to millions of the poorest of poor Indians who could not obtain any other document, to enable them to open bank accounts and obtain subsidy payments directly into those accounts. It was meant to take corruption out of welfare programmes. Under Narendra Modi, it has become the Aadhaar for a dystopian surveillance state.