Is Aadhaar is necessary to do Direct Benefit Transfers – subsidies given directly to people through their bank accounts -- and will lack of Aadhaar mean lakhs of beneficiaries who are already on it will face severe problems, with their wages, pensions payments adversely affected?

On October 15, 2015, during the Supreme Court on Aadhaar, the government claimed that Aadhaar is used to provide wages to 1 crore workers under the national rural employment guarantee scheme and to reach 30 lakh pensioners.

Disrupting this system now by limiting it to voluntary use, the government claimed, will disrupt payments to a large section of the population. It requested the court to instead permit it to make Aadhaar mandatory in 80 social schemes.

But Direct Benefit Transfers – subsidies given directly to people through their bank accounts – was at that time mostly being carried out through the National Electronic Funds Transfer(NEFT), not through Aadhaar. Even now, Direct Benefit Transfer do not need Aadhaar, they can be done through NEFT very successfully.

In March 2015, 98.3% of MNREGA workers received wages through simple NEFT bank transfers. Only 1.6% of wages were paid through the Aadhaar Payment Bridge System, and 0.1% through another system, called the Public Financial Management System, which again doesn’t require Aadhaar.

For social pensions, the government had made 92.6% of Direct Benefits Transfers through NEFT, and only 5.2% through the Aadhaar Payment Bridge System and it can continue to pay pensions directly into bank accounts without Aadhaar.

(charts here and here)