The Supreme Court’s decision to retain mandatory linking of Aadhaar with disbursal of social welfare benefits — while indefinitely extending the deadline for tagging it to bank accounts or mobile phones — echoes the Law Ministry’s 2016 opinions that linking Aadhaar was a pre-condition merely for subsidy or benefit out of the Consolidated Fund and could not be extended elsewhere, even to the government’s Public Account Fund.
To a Finance Ministry’s proposal making it mandatory for those investing in small savings schemes to link their accounts with the Aadhaar number, the Law Ministry said on October 4 that such saving schemes could not be notified as “service within the meaning of Section 7 of the Aadhaar Act”.
Section 7 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”.
It declined giving legal mandate to the Department of Economic Affairs’ (DEA) proposal arguing that these small savings were serviced under the Public Account Fund of India and not the Consolidated Fund.
Not satisfied with this opinion, the DEA once again approached the Law Ministry to reconsider its 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”.
This too failed to cut much ice with the Law.
The Department of Legal Affairs, which advises the ministries on legal matters including interpretation of the Constitution and the laws, reiterated on December 14 its October 4 opinion while backing it with a 2001 order of a Constitution Bench.
It quoted the Supreme Court’s Constitution Bench that “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”.
The Law Ministry directed that all transactions relating to small savings schemes — like Kisan Vikas Patra, Public Provident Fund, National Savings Certificate, Senior Citizen Saving Scheme and Sukanya Samriddhi Yojana — should be accounted from the Public Account Fund as per the National Small Savings Fund (Custody & Investment) Rules.
These saving schemes attract gross deposits of over Rs 2 lakh crore each year and the DEA had argued 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.