What’s so smart about SMART Cards?
By Mandakini Devasher, 02 Jul 2010

India is undergoing a smart revolution – make that a smart card revolution. Smart cards have been in the news lately with the Government’s decision to set up a Unique Identification Authority (UIDA) to develop multi-purpose identity cards for every Indian. The smart card UIDs are expected to improve national security, enable easy access to government services and help eliminate fraud and corruption in the management of large-scale social welfare schemes as the NREGA and PDS. But, UIDs are just the tip of the iceberg – there is a vast and untapped market for smart cards in India. Growing annually at the rate of 45% the Indian smart card industry is predicted to reach $6 billion by 2010.

Basically, smart cards are pocket sized electronic devices that can store a variety of data safely and securely. We are all too are familiar with the many avatars of these nifty devices which include credit cards, ATM cards, fuel and phone cards. Smart cards are commonly used in Europe and other developed countries as they offer governments and service providers and citizens with a number of benefits. First of all, they are portable, easy to use and offer cashless and paperless transactions. They can be used to as a one-stop shop for citizens to access multiple services. Smart cards improve service delivery by connecting clients directly with service providers thereby reducing the discretion of public authorities. If implemented well smart cards can improve service delivery systems to cut out middlemen, corruption and bring services to closer to end users and beneficiaries. From a service delivery and accountability perspective, smart cards can help plug leakages and curb corruption in the implementation of large-scale social welfare schemes. Capable of storing a range of beneficiary data such as name, address, photographs as well as biometric information, smart cards can help in beneficiary selection, identification and targeting under anti-poverty programmes and schemes.

The Indian government is experimenting with smart cards in sectors such as health care, transport, social security and defence. Smart cards are increasingly being used to deliver wages, pensions, rations and even health benefits under programmes such as the NREGA and RSBY. A number of States including Andhra Pradesh, Bihar, Delhi, Tamil Nadu amongst others have already begun integrating smart cards in the implementation of government schemes and programmes with interesting results. In Andhra Pradesh, the State Government has tied up with Mumbai based company - Financial Information Network and Operations (FINO) – to provide biometric smart cards to disburse social security pensions and NREGS wages in 5 districts. Following a successful pilot of the smart card initiative in Warangal and Karimnagar districts, smart cards are now being used for disbursement of pensions and NREGS wages in 259 villages in Andhra Pradesh. In Delhi, the State Government has launched “Samajik Suvidha Sangam” (Mission Convergence) to streamline the delivery of basic services in the NCR by converging citizen services provided by various departments into a single window for easier beneficiary access. Key components of the programme include the setting up of a computerised data bank, computer systems at each delivery point and the provision of e-benefit cards to citizens. The e-benefit card is a biometric smart card issued to individuals to provide them with easy access to a number of government services. At a national level, smart cards are being used to deliver health insurance benefits to BPL families under the Rashtriya Swasthiya Bima Yojana (RSBY). Under the scheme, all beneficiaries are issued biometric smart cards that contain the fingerprints and photographs of family members. As of 6 August 2009, 53,77,708 smart cards are active and operational in the country. Increasingly, a number of States are considering using the RSBY smart cards to piggy back other welfare schemes, as the cards now provide a dependable means of beneficiary identification.

While there is certainly limitless potential for the use of smart cards in India, there is also need for caution. For one thing, there is a huge gap in our knowledge base about how smart cards actually work on the ground. There is not a lot of data or research that documents the use and impact of smart cards on large-scale social sector programmes like the NREGA or RSBY. There is also little information publicly available about the actual details of how these schemes are being managed. With contracts being awarded to private companies there are growing concerns about the transparency and accountability of these companies to beneficiaries and ultimately taxpayers. However, by far the biggest challenge is surely in the execution and implementation of smart card technologies. Smart cards clearly have the potential to revolutionise the way we think about service delivery – but the success of this technology depends greatly on how well they are implemented. The old adage “well begun but half done” come to mind here. The perennial Achilles heel of India’s many welfare programmes has always been weak implementation. The Government of India has been issuing voter ID cards, ration cards and PAN cards for a number of years, yet, discrepancies such as ghost entries, missing beneficiaries, multiple cards continue to exist. These are issues which must be addressed as smart cards become the new mantra in service delivery. As Swaminathan A Aiyar recently observed, there is a real danger of smart cards becoming “just one more scheme, with its own leakages and omissions”. Ironically, it appears we need to be smart about smart cards!

Mandakini Devasher is a Consultant with the Accountability Initiative.