One of the two Nobel Prize winners in Economics, Paul Romer who also received the prize for ‘Integrating technological innovations into long-run macroeconomic analysis’, has called Aadhaar the ‘most sophisticated system’ that he has ever seen. The economics of Paul Romer gained significance in recent decades in public policy sphere and it also provides intellectual backing to large non-governmental organization like Bill and Melinda Gates Foundation. Last year when he was World Bank’s chief economist, he told Bloomberg that “Aadhaar is the basis for all kinds of connections that involve things like financial transactions…..it could be good for the world if this became widely adopted. It should be part of the policy of the government to give individuals some control over the data that the private firms collect and some control over how that data is used”. The assessment of Romer is important in light of Supreme Court’s decision to ban private companies to use Aadhaar data.
This year’s Nobel Prize in Economics was shared by William Nordhaus and Paul Romer for integrating climate change and technological innovations into long-run macroeconomic analysis. “Their findings have significantly broadened the scope of economic analysis by constructing models that explain how the market economy interacts with nature and knowledge,” the Royal Swedish Academy of Sciences said. Romer is well known for arguing for endogamous growth theory. According to this theory, investment in human capital, innovation, and knowledge are significant contributors to economic growth and not external factors. “We don’t really produce anything. Everything was already here, so all we can ever do is rearrange things. Think of conservation of mass. We’ve got the same amount of stuff we’ve always had, but the world is a nicer place to live in because we’ve rearranged it,” said Romer in a 2007 interview. “I think part of why this question attracted me was because of my background in physics, and to a physicist, the whole notion of a production function sounds wrong,” Romer argued further. The endogamous theory is in contrast with neoclassical economics which argues that technological advancement and external factors are main drivers of economic growth, this theory was proposed at the time of industrial revolution.
Aadhar proved very beneficial to provide leakage free welfare to the people of the country. In 2016-17 alone, the government saved plugging leakage worth Rs 32, 984 crore. In previous fiscal year, government saved 90,000 crore by streamlining welfare schemes through Aadhaar. Direct Benefit Transfer (DBT) through Aadhaar made transfer of MGNREGA benefits more transparent and removed the middle man. DBT has been hugely beneficial for the government to control the leakage in delivery of public services. There are talks that DBT could also be used for direct transfer of compensation to farmer’s account instead of using Minimum Support Price (MSP). “To make farming remunerative, the delivery of inputs should be made cost-effective through direct benefit transfer mode. Further, there are issues of procurement of perishables such as onions, potatoes and tomatoes for which timely disposal is necessary, and may be difficult for an agency to efficiently perform. After debating the same, support in the form of MSP (minimum support price) for crops other than rice and wheat needs to be shifted to DBT format,” wrote Economic Survey 2016-17. Praise from Nobel Prize economists reassures us about the importance of Aadhaar and its a slap on the face of the Aadhaar critics who care only about their personal benefits not about welfare of the people of the country.