NEW DELHI: United Progressive Alliance (UPA) government's flagship project to assign a unique identity (UID) number to 1.2 billion Indians has suffered another setback with the enrollment process that involves capturing people's biometrics virtually coming to a grinding halt across the country.Agencies contracted to enroll people into the Aadhaar fold have joined hands to protest heavy penalties levied on them by the Unique Identification Authority of India (UIDAI) that was steered by tech billionaire Nandan Nilekani till three months ago.The enrollment imbroglio is the latest in a series of shocks for the project in recent weeks, with RBI suspending a plan to mandate Aadhaar-based biometric ATMs and the finance ministry stating that direct benefits transfer (DBT) can work even without Aadhaar. The development is significant amidst uncertainty at the UIDAI headquarters and field offices about the Aadhaar project's future under the new government.Union Home Minister Rajnath Singh is expected to mull options for the project this week. Some agencies said only about 100 enrollment kits are in operation in the highly populated states of Uttar Pradesh and Bihar that the UPA decided to let UIDAI cover in February this year, making the agency responsible for covering over 930 million people.The UPA Cabinet's decision to expand the authority's mandate was unusual as it came within days of another decision to suspend a scheme to directly transfer subsidy benefits for LPG cylinders to users' banks accounts on the basis of their Aadhaar numbers. But instead of enrollments being scaled up after the decision to let UIDAI target states with a very high population density, they have virtually stopped since then.Its enrollment agencies, upset over the high penalties being charged by Aadhaar for mistakes in enrollment, have come together to form an association. If their concerns are not addressed, says Jaipal Reddy, the national coordinator of the Aadhaar enrollment Agencies Association (AEAA), which is still being incorporated, "We will be forced to stop work across the country and seek legal action on these issues."Under the UPA, the UIDAI positioned itself as a way to uniquely identify individuals through their biometrics (as a mode of authentication, ergo), and as an integral building block for direct benefit transfers.In the process, it also created architecture for cash transfers. However, some of these propositions have taken a beating since then. Last month, the RBI backtracked on an earlier directive instructing banks to overhaul all ATMs and PoS machines to accept Aadhaar. The apex bank has told banks to re-examine the technical difficulties of the proposed biometric payment system and the time frame for implementation.In a report reviewing the problems faced by the DBT scheme for LPG cylinders, made public last week, the finance ministry has backed DBTs as a superior method for delivery of subsidies but said the Aadhaar platform is not the only route for such transfers. One of Aadhaar's biggest strengths is the number of Aadhaar numbers given out till now, nearly 600 million.With it being told to do enrollments in UP, Bihar, Jharkhand and Uttarakhand, it was all set to enroll a total of 930 million people. But the penalties, says the association, have plunged enrollment agencies into a financial crisis. "About 80 per cent of enrollment agencies are at the edge of bankruptcy," said Reddy.Aadhaar enrollment has fallen as well, especially in the new states given to the UIDAI. Comments the AEAA official quoted above, "Most enrollment agencies are now doing just enough work to protect their bank guarantees. In UP and Bihar, there won't be more than 100 enrollment kits in circulation."The dispute pivots around mistakes in enrollment. A senior official at an enrollment agency, talking to ETon the condition of anonymity, said the UIDAI is imposing heavy penalties over the past six months for errors like accidentally capturing biometrics of nine —not all 10 — fingers. This is challenged by Vijay Madan, the UIDAI's director-general.According to Madan, the de-facto head of the UIDAI as the government is yet to find a replacement for Nilekani, the reason for the penalties lies elsewhere. Some EAs, he says, were taking inordinately long to upload the enrollment packets (details of the people enrolling).In some cases, he says, the delays were as long as 70-90 days. Penalties are also being imposed, he says, whenever Aadhaar found a significant number of biometric exceptions (people being enrolled without capturing either their iris or fingerprints).Operators were doing this for one of two reasons, said Madan. "Because the operator feels he can enroll more people if he doesn't have to capture biometrics, or because the person doesn't exist."According to him, the UIDAI imposed penalties only for biometric exceptions – not in cases where biometrics of all fingers were not captured. But the association in the making argues that between January and March 2014, as much as 52 per cent of the total payment due to the agencies has been deducted as a penalty. Of the Rs 149.81 crore due to the EAs, Rs 78.75 crore has been deducted."In a project as ambitious as this, you cannot have a 100 per cent accuracy rate. There has to be an acceptable error margin of 1 per cent," said Reddy. Agencies want the penalties to be dropped and want to be paid for duplicate enrollments — when people enrolled twice for an Aadhaar number.UIDAI pays only for the enrollments that translate into a number. Subsequent enrollments get rejected. The association, which has 62 members already, will meet UIDAI honchos on June 20 to discuss this standoff, even as speculation is high about what the NDA will do with Aadhaar.After complaints about problems in the field and a Supreme Court diktat questioning the government's decision to make Aadhaar numbers mandatory for several official purposes and subsidy schemes, the UPA paused DBTs in LPG.At the same time, concerns about poor enrollment — and questions about data quality in the UIDAI database — resurfaced after a sting operation by Cobrapost. A Mumbai High Court ordering the UIDAI to share biometrics of people in Goa with the CBI to help the latter with a rape investigation underscored the lack of legal norms governing the use of biometric information.