Modi Govt Goes Against SC Order; Makes Aadhaar Number Compulsory For New Entrepreneurs

Going against the Supreme Court decision to only use Aadhar Cards ‘voluntarily’ for a few social welfare schemes, the Modi government has made it compulsory for any new budding entrepreneur to submit their Aadhaar number in order to register a new business.

To make matters worse for the new budding entrepreneurs, start-ups can’t even ‘fill’ the newly introduced online form that are available for registering new enterprises, unless the Aadhaar credentials of their promoters are also validated online.


Taking cue from PM Modi’s radio show last month, the Ministry for Micro, Small and Medium enterprises had last month notified Udyog Aadhaar to simplify the application procedures for any upcoming start-up business with a single-page registration form.

Meanwhile Supreme Court lawyer Pavan Duggal told Economic Times that the government’s move is in direct violation of the Supreme Court order on Aadhaar:

“The Supreme Court has been crystal clear on the Aadhaar number being voluntary for now, so this would be a violation of the apex court’s order and could be a fit case for contempt of court. This would also infringe on citizens’ right to equality, as it would discriminate against people who don’t have Aadhaar numbers yet.”

Agreeing to Duggal’s view, some state governments have also voiced their apprehension:

“In our state, Aadhaar enrolment has only begun in three districts. We had advised the central government to consider allowing PAN cards or other identity documents as well, but with Aadhaar linkage being mandatory in the form, we will not be able to submit any applications from our state.”

Reetika Khera, associate professor of economics at the Indian Institute of Technology (IIT), Delhi further states her reservation about the move and says it’s a mockery of the apex court’s order.

She points out that the SC, in its order in early 2015, asked the government to modify its forms in order to be compliant with its orders and in August directed it to advertise the voluntary aspect of Aadhaar.

“The most recent order on 15 October said voluntary use is allowed for PDS, NREGA, National Social Assistance programme and EPFO,” she said.

Meanwhile, an MSME official defended the move and explained the rationale behind the new one-page form:

“A large chunk of enterprises in India are simply not registered due to the cumbersome paperwork involved in the process and, therefore, can’t tap the government schemes for them.

The official says that the KV Kamath panel on financing the MSME sector had recommended that the registration should be universalised.

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