Union Finance Minister Arun Jaitley at the Conclave on Financial Inclusion in New Delhi on Wednesday. (PTI Photo) Union Finance Minister Arun Jaitley at the Conclave on Financial Inclusion in New Delhi on Wednesday. (PTI Photo)

Finance Minister Arun Jaitley Wednesday said the Aadhaar law will “pass the test of constitutionality” and that it is important to build “ironwalls” to protect people’s data. He said the Aadhaar scheme announced by the UPA government was “technologically great” but it did not realise the “full potential” of the unique identification system. The NDA government, he said, provided legal backing to Aadhaar to realise its full potential, including direct transfer of benefits to bank accounts of beneficiaries.

The Supreme Court is hearing a petition challenging making Aadhaar mandatory for availing benefits under various social welfare schemes of the government. The next hearing is in the first week of November.

“When the UPA government brought in Aadhaar, in terms of technology, it was a great idea… but its full potential was not realised,” Jaitley said at an event on financial inclusion organised by the United Nations in India.

“A legislation was necessary and because of evolving debate, the confidentiality of the data and (the need) to build some ironwalls around the data itself was also equally important. The (Aadhaar) legislation has been passed and I am sure it will stand the test of constitutionality,” he said.

Last month, a nine-judge Constitution Bench of the Supreme Court declared right to privacy a fundamental right, saying it is protected as an intrinsic part of the right to life and personal liberty under Article 21 and as a part of the freedom guaranteed by the Constitution. The Bench, however, provided some “illustrative restraints” to the right to privacy.

The Centre has separately set up a committee to draft a data protection law. Jaitley alluded to “reasonable restrictions” highlighted by the Supreme Court in the judgement while upholding the idea of privacy as an important constitutional guarantee under Article 21 of the Constitution.

Distribution of social benefits using Aadhaar data was cited as a reasonable restriction in the judgement, he said.

Citing these restraints posing conditions on privacy, Jaitley said: “They have to be by the law, they have to be obviously reasonable and some of illustrative restraints, these are illustrative and not exhaustive, are in the larger interest of national security or for the purposes of detection of crime or for the purpose of dissemination of social benefits.”

“I think the third criteria is very consciously inserted as an illustrative restraint because that is the principal purpose for which this was intended to be used and that is where this interplay of over a billion Aadhaar number over a billion bank accounts and mobile phones itself has an important role,” he said.

Jaitley said Aadhaar helps in better targeting of subsidies as it is able to identify the actual beneficiaries. Aadhaar, combined with Jan Dhan accounts, ensures an efficient system of transferring benefits.

He said as many as 30 crore families have got bank accounts since the launch of India’s biggest ever bank account opening drive, Jan Dhan Yojana, three years ago.

Over the period of three years, he said, the number of zero-balance accounts has reduced from 77 per cent to 20 per cent and even these would become operational once the direct benefit transfer is expanded.

“The more the DBT expands, the more the operationalisation itself of these accounts expands,” he said.

In addition to financial inclusion, Jaitley said, the government has taken steps to provide security to the poor via life insurance under the Pradhan Mantra Jeevan Jyoti Bima Yojana (PMJJBY) and accident insurance Pradhan Mantra Suraksha Bima Yojana (PMSBY).

Total enrolment was 3.6 crore under the PMJJBY and 10.96 crore under PMSBY.

Speaking at the same conference, Niti Aayog vice chairman Rajiv Kumar said financial inclusion helped in giving a digital push to the economy, bringing it into the mainstream.

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