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Law Ministry rejects Finance move to link small savings to Aadhaar

Ahead of launching the demonetisation drive, the Finance Ministry had sought Law Ministry’s opinion whether Aadhaar submission could be made compulsory for small savings scheme.

Written by Amitav Ranjan | New Delhi | Published: December 28, 2016 4:10 am
Aadhaar, Aadhaar linked accounts, Aadhaar linked schemes, Aadhaar linked saving schemes, small savings scheme, Aadhaar card, India news Photo for representational purpose.

The Law Ministry has turned down Finance Ministry’s proposal that a person investing in small savings schemes — these attract gross deposits of over Rs 2 lakh crore each year — be made to link the accounts to his or her Aadhaar number.

Ahead of launching the demonetisation drive, the Finance Ministry had sought Law Ministry’s opinion whether Aadhaar submission could be made compulsory for small savings schemes like Kisan Vikas Patra, Public Provident Fund, National Savings Certificate, Senior Citizen Saving Scheme and Sukanya Samriddhi Yojana.

The rationale put forth by Finance Ministry’s Department of Economic Affairs (DEA) was that individuals evade scrutiny by parking cash below Rs 50,000 into multiple small savings accounts because such deposits (below Rs 50,000) do not seek permanent account number (PAN) details.

The Law Ministry turned down DEA’s proposal on October 4 saying such schemes cannot be notified as “service within the meaning of Section 7 of the Aadhaar Act” since small savings are serviced under the Public Account Fund of India and not the Consolidated Fund to which the Aadhaar Act applies.

Section 7 of the Act states that the government can ask an individual to furnish his Aadhaar number to establish his identity “as a condition for receipt of a subsidy, benefit or service for which the expenditure is incurred from, or the receipt therefrom forms part of, the Consolidated Fund of India”.

Not satisfied with the legal opinion, the DEA once again approached Law Ministry to reconsider the October 4 advice, saying that the fresh reasoning for bringing small savings under the Aadhaar ambit was that the “expenditure incurred to campaign for small savings scheme was derived from the Consolidated Fund”.

On December 14, Law Ministry reiterated its earlier opinion and directed that all transactions relating to these schemes should be accounted from the Public Account Fund as per the National Small Savings Fund (Custody & Investment) Rules.

Quoting a 2001 order of a Constitution Bench of the Supreme Court, the Law Ministry said “when a statute vests certain power in an authority to be exercised in a particular manner, the said authority has to exercise it only in the manner provided in the statute itself”.

In fiscal 2014-15, deposits in small savings schemes were Rs 289,080 crore while withdrawals were Rs 248,667 crore.

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  1. D
    Dai Haree
    Dec 28, 2016 at 12:08 pm
    Adhaar systems is not good for everyone especially rural area so let me request it should be exempted to Rurally area.
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      Praful Vora
      Dec 28, 2016 at 1:04 am
      Aadhar prevents corruption
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      1. A
        Abhishek
        Dec 28, 2016 at 6:53 am
        Once aadhar gets leaked, all your money will be gone in a second.
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        1. P
          pal
          Dec 28, 2016 at 7:18 am
          I am in total agreement with the justification put forward by the law Ministry in the matter.lt;br/gt;I feel that Ministry of Finance should have been much careful in drawing expenditure amount from consolidated fund of India when there were much justification to draw from Public Account fund for promotional activities under Small Savings Scheme.
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          1. Kannan Kannan
            Dec 28, 2016 at 2:55 am
            why are they obstructionist? Law ministry. I dont have good opinion on Ravi S Prasad. dicey. if you allow 2000 rs without aadhar, 2000 X 100,000 people at the least becomes 20,00,00,000= 20 cr with 1.25 billion people, politicians can easily make fake accounts for 10000000, then that makes 2000X 10000000=2000,00,00,000= 2000 cr easily hidden from the IT. so this is the reason. People are fooled to get their money out of savings all, 500 and 1000, but law minister and ministry enabling politicians to get more corrupt. Wah, Modi, you and your cleanliness drive!!
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