Public Money, Private Architecture: Inside India’s Digital Infrastructure Black Holes

Originally published as a series of Twitter threads between March–May 2020

Over the past few weeks, I’ve been doing reading sessions on two critical pillars of India’s digital governance architecture — the Nandan Nilekani PDS Task Force report that first mooted the idea of PDSN, and the PM-CARES / PMNRF accountability vacuum that emerged during the COVID-19 crisis. What connects them is a single, disturbing pattern: public money flowing through privately-architected structures that evade every democratic accountability mechanism — RTI, CAG, CVC, parliamentary questions.

This is that story.

Part I: The Nandan Nilekani PDS Task Force — The 2011 Blueprint for Data Centralisation

The Anti-Aadhaar Lobby vs. The Aadhaar Lobby

In October 2011, a Task Force chaired by Nandan Nilekani submitted its report on an IT Strategy for PDS and an implementable solution for direct transfer of subsidy for food and kerosene. ¹

Before diving in, note the title — the czar didn’t like “committees” and hence called whatever he was part of a “task force.” ² Though, as we shall see, no task was actually done.

The members were all ex-officio secretaries, except two from UIDAI — an entity that was then functioning as an illegal executive body. This was essentially done by the “Aadhaar lobby.” ³

In May 2020, Nandan-funded media would call it the “anti-Aadhaar lobby in NAC” that stalled it during the UPA era. History, as they say, is written by those who fund the historians.

The NIU Playbook: Private Structure, Public Power

The report begins with seemingly innocuous language — “incentive-compatible for all stakeholders.” Translation: lure every stakeholder to agree to be databased, such that ultimate power rests at the behest of the network. ⁴

This is the very same tactic that Uber and Ola later used to onboard riders, drivers, and cities. Platform dynamics, network effects, and data economy power — all by design. ⁵

The report then references “strategic control with government.” What is left unsaid is that operational control will be with private players. ⁶

This is the NIU (National Information Utility) model — a pattern replicated across:

• UIDAI — forced to become a government entity, but retains the architecture of private control
• NPCI — Section 25 company, no RTI, no CAG audit
• GSTN — which was still a private entity at the time

All follow the same template: monopoly databases at private hands. ⁷

PDSN: Non-Profit, Non-Accountable

The report proposed PDSN as a non-profit, private entity under Section 25 of the Companies Act — as envisioned in Nandan’s own TAGUP (Technology Advisory Group for Unique Projects) report, which itself was a manuscript given by superior powers.

In 2011, there was no lateral entry. This “open to private sector” provision is basically the introduction of a revolving door in Indian administration. ⁸

Section 25 means: no RTI, no CAG, no CVC. Financial independence too, naturally.

The Chairman would be appointed by the Government of India. Remember the GST Council and the veto power the Finance Minister holds? Same playbook.

It put a monopolistic environment on paper and called it an “independent legal entity.” Independent of whom? The government. So as a citizen, you can’t demand accountability from it.

The TAGUP Template

The structure mirrors GSTN, which was in-principle approved at the same time: ⁹

1. State must have strategic control but minority stakes — giving complete operational autonomy and hence staying outside government checks and balances like RTI, CAG, and CVC
2. A sectoral data monopoly undertaking data centralization through a platform centralizing transactions, often mandated through government law
3. All participating governments sign IT contracts with the entity for services on top of the data platform

The report shamelessly self-references TAGUP multiple times. It also uses the Supreme Court’s PUCL v. Union of India judgment to push for the NIU model. ¹⁰

Taking State IT Along

The strategy was to take state IT along — to minimize opposers. Where have we seen this? Yes, Aadhaar’s SRDH. Also, a message to states: we will reuse your capex. ¹¹

Why Is a Constitutional Court Designing IT Projects?

The PUCL case, popularly known as the Right to Food case, directed end-to-end computerisation of PDS. But why should a constitutional court lay out a giant IT project roadmap in its judgment? ¹²

This trend continues even now — they’ve gone one step further and started appointing project managers. What next — server specs in the judgment?

But nobody asked the real question: Why is the technology not transparent?

The Illusion of Federal Autonomy

The report speaks of “federal autonomy with centralized database” — an oxymoron. It also contains a consistent nudge towards “choice of subsidy,” designed to voluntarily make people mandatorily opt for cash and dismantle PDS.

Aadhaar linkage would come in Phase 2 — people first need to get it. ¹³

A 1-mark question: What’s the difference between UPA’s PDSN and NDA’s PDSN?

State participation was “voluntary” under the UPA, while Nirmala Sitharaman made it a condition to join ONORC (which includes PDSN) for relaxation of FRBM during COVID-19. The 16-mark question comes later.

Software Architecture: The Data Aggregation Layer

The software architecture clearly spells out that PDSN will be a data aggregation layer. Note also the Ration Card–Aadhaar integration.

We’ll revisit this in the context of IMPDS implementation, the Social Registry, and how ONORC could be used for NRC. But that’s a thread for another day.

The Aadhaar dedup in the solution architecture of SCM-PDS is pure snake oil — Aadhaar can be enrolled using a fake ration card, and now the person has two Aadhaar-linked ration cards.

Information Visibility: Ministry of Finance Over Everything

The PDSN reports to capital. Information visibility to the Ministry of Finance over everything — this is the crux of PDSN.

The automation of audit by tech platforms (that are themselves outside CAG) is a feature, not a bug.

The Financialisation of Food Subsidy

The Core Subsidy Management System is designed for the financialisation of food subsidy — meaning people having debts will starve because their food subsidy goes towards debt repayments.

When judicial solutionism and techno-solutionism are in such deep love that they are one mind in two souls, this is what you get.

Aadhaar Leakage by Design

On the Aadhaar linkage parts — anything Aadhaar by itself leaks, still there was a commitment to publish a database of all applicants and publish them online. ¹⁴

Ownership of Source Code: Should It Not Be Public?

The IT strategy did not study existing status in detail, but it just also suggests transfer of IP to the new entity it suggests!

Ownership of source code — should it not be public? #PublicMoneyPublicCode ¹⁵

These just jot down detailed power accumulation of PDSN, just like GSTN did for taxation data.

The As-Is Study That Never Was

The IT strategy for PDS was made without doing a “comprehensive ‘As Is’ study.” So much for task forces.

On studying existing IT infrastructure and best practices, Tamil Nadu fared in 7 out of 12 items. The remaining gaps were on targeting and use of biometrics. One small takeaway: if you want to be best in feeding, go universal. Tamil Nadu has universal PDS, not Targeted PDS.

The “Tech Is Neutral” Snake Oil

Look who is talking of constitution and autonomy. Also — the age-old “tech is neutral” snake oil while centralizing data for analytics, which gives data owners aggregate value.

The TPS Problem

An IIT-JEE level question: read the system requirements and calculate the TPS capability of PDSN. This is important because they still haven’t got it right for GSTN, and imagine what havoc PDSN could cause.

What PDSN Actually Does

So what does PDSN do? TL;DR — all IT & ITeS to be handled by it.

The “incentive-compatible solution design” translation: this strategy is only about data platformisation of PDS through PDSN and is not about policy making. The private entity having operational control will use the data as a detailed free market survey before pushing to dismantle the system, once they have enough data.

Accountability Light: The Sample MoU

The report ends with a sample MoU between PDSN and state governments, where it’s clearly spelt out that they should be “accountability light.”

Where Things Stand Today

This 2011 report is only a frame of reference for understanding ONORC. The current scheme design has changed — PDSN is now directly under the control of the government (they don’t want to repeat the GSTN mistake again), with IMPDS housing PDSN inside the Ministry of Consumer Affairs, Food and Public Distribution.

The thread on IMPDS — the current-day portability implementation — is a continuation of this story.

Part II: PM-CARES — A New Fund, Same Old Opacity

Why PM-CARES When PMNRF Exists?

On 27 March 2020, as India went into lockdown, a new fund was born: PM-CARES. The question was immediate: why is pmnrf.gov.in not being used, and a personally-branded fund being set up instead? ¹⁶

PMNRF has receipt generation, has existed for ages. PM-CARES attempts to profit out of disaster. #DisasterPayments ¹⁷

The PMNRF Cash Problem

PMNRF had a balance of ₹3,800 crore — but the devil is always in the details. If you examine the 2018-19 receipt and payment accounts, only ₹486.79 crore was considered as “cash.” ¹⁸

That’s because PMNRF had invested in “perpetual bonds.” In 2018-19, IDFC FIRST Bank got a ₹250 crore FDR from PMNRF. It was Union Bank in 2017. ¹⁹

Extreme capitalisation of PMNRF (which also bails out banks!) renders the fund devoid of its purpose — liquidity for exigencies of greater magnitude like COVID-19. ²⁰

The whole point of a relief fund is to serve sudden emergencies. Using that capital to invest in long-term/perpetual instruments to support the banking sector means we are short of cash for the real need. ²¹

When total cash/cash equivalents reduced to 15% per accounting statements, it should have triggered alarm bells. Poor oversight plus extreme centralisation in decision-making leads to this — without sufficient checks.

The PAN Problem

PM-CARES masks its PAN to XXXXXX637Q. What is the need for masking the PAN of a fund? Privacy for the PM’s fund?

CashlessConsumer studied disaster payments and raised the question: what is the PAN of PMNRF? PMNRF allows people to download receipts. PM-CARES has neither — it didn’t even give a PAN for claiming 80G exemption.

Remember, if there is no PAN, you can’t claim income tax exemption. This was confirmed by an RTI reply from Income Tax India (Systems).

The PIB statement mentions “donations to this fund will be exempted from income tax under section 80(G).” But the catch: is it 100% exempt like PMNRF or 50% exempt like other private registered charities?

PMNRF is exempted from income tax by statute. PM-CARES will be paying tax — so the government can raise funds by taxing the received contributions, citing the disaster? ²²

Who Is Running PM-CARES?

Who is running PM-CARES? Whoever runs it also gets donor data. ²³

Note that there was no tweet from @PMOIndia — the appeal came only from @narendramodi, the personal account.

The PhonePe 30-Minute Miracle

There was also an attempt to drive transactions through PhonePe, which was hit by the Yes Bank crisis. A quote-tweet from the PM’s personal account is not unusual. But how did PhonePe launch a PM-CARES donation campaign in 30 minutes when other payment companies weren’t in the loop?

PhonePe had enough time to put up a Terms and Conditions page for the campaign — which explicitly stated they wouldn’t be providing receipts for 80G exemption.

Nowhere in the PM-CARES PIB release was PMNRF mentioned. So how did PhonePe add it in their FAQ?

Personal Brand Over Institutional Legacy

Could the answer for bypassing PMNRF be — Nehru? The PMNRF about page reveals it was established by Nehru in January 1948.

PMNRF: Not Holier Either

More important questions were raised by RURALINDIA and SaketGokhale.

The PMNRF donation vs expenditure graph since 2014 raised further questions. And where does one go and ask for checks and balances?

It starts from money meant for getting PPEs.

There is more dirt coming up on PMNRF (right from its inception/origins) and it doesn’t feel good. Both PMNRF and PM-CARES don’t instill confidence. ²⁴

Part III: PMNRF — A “Private” Fund Since 1948

The Delhi High Court Case

In the light of PM-CARES, it’s important to understand how PMNRF is governed. There was a case in Delhi HC on the applicability of RTI to PMNRF, and the arguments are revealing about the governance structure. ²⁵

The petition asked for details about institutional donors — data that could be mapped/linked to lobbying and political funding.

PMNRF’s response: It is a private fund ²⁶

PMNRF’s submissions in Delhi HC: no questions in Parliament, it’s a private fund, no RTI, no CAG audit. ²⁷

The Nehru Origins

The problem lies from inception — PMNRF was essentially Nehru’s version of PM-CARES — established entirely with public contributions but structured as a private fund with no budgetary support.

Everyone who works for PMNRF — volunteers, it seems.

The Split Verdict

The classic fiduciary argument — that PMNRF discharges a public function and should be accountable — was rejected by one judge but accepted by another.

One judge of the two-judge bench was pro-release of institutional donor information. The other dissented. The status of the issue hangs — referred to a third judge since 2018, still pending.

If you started on this thread, read the thread on PM-CARES too. Essentially, both have similar accountability structures and are not very different. ²⁸

Part IV: Cash Transfers — The Myth of Transparency

Aadhaar Isn’t Immune to Corruption

The narrative that cash transfers solve corruption needs serious pushback. Aadhaar-linked systems continue to leak — Aadhaar itself is prone to corruption.

The Government Stops at the Bank Level

The government stops its delivery at the bank level. What do people do when they don’t have access to branches, ATMs, or are denied debit cards? How do they access DBT? Enter Banking Correspondents — the new middleman.

They’re demanding a fixed commission structure of ₹5,000 per month — and they still don’t get it. At this point, a good chunk of them are incentivised to corrupt people at the point of delivery of DBT.

This is besides the cost — 3.15% transaction fee and double/triple GST over it.

NPCI: Not Transparent Enough

The claim on transparency of bank transfers is overrated. NPCI does not come under RTI and we all know how the Airtel Payments Bank scam happened.

Suffice to say it’s not transparent enough. You don’t get uptime or error-code level data publicly.

Who Actually Benefits?

“It’s a direct credit in your bank account from the government.” Yes — not disputing this. But who does this actually benefit? Banks, in the name of the poor.

Centralisation Without Checks

Centralisation has its efficiencies, but when centralisation happens without checks and balances, we get into rogue behaviour centralisation — which makes rogue behaviour optimal. It does not benefit people.

The Common Thread

What connects the Nandan PDS Task Force report, PM-CARES/PMNRF, and the DBT architecture?

A consistent pattern of designing public systems with private-sector accountability structures — or rather, the absence of accountability.

• PDSN was proposed as a Section 25 company (no RTI, no CAG, no CVC)
• PMNRF claims to be a “private fund” in court to avoid scrutiny
• PM-CARES was launched without PAN, without receipts, with a masked PAN
• NPCI argues it’s not a public authority under RTI
• Banking Correspondents create new middlemen in a system that promised to eliminate them
• The Aadhaar Payments Bridge System diverts subsidies to accounts people can’t access

The technology itself is not the problem. The architecture of governance around it — where public money flows through structures designed to evade democratic oversight — is.

References

Source Threads

• Nandan PDS Task Force Report Reading Session — 38 tweets (May 18, 2020)
• PM-CARES Accountability Thread — 29 tweets (Mar 30, 2020)
• PMNRF Governance — Delhi HC Case — 8 tweets (Mar 31, 2020)
• Cash Transfer Transparency — 7 tweets (Apr 23, 2020)

External Sources

• Report of the Task Force on an IT Strategy for PDS (October 2011) — Ministry of Finance
• Report of the Technology Advisory Group for Unique Projects (TAGUP) (January 2011) — Ministry of Finance
• TAGUP — Wikipedia
• PUCL v. Union of India (Right to Food Case) — CaseMine
• GSTN — Wikipedia
• PMNRF — Official Website
• PM’s Funds — PM India
• PMNRF — CSR Activities, IDFC FIRST Bank
• PMNRF v. Aseem Takyar — Delhi High Court Split Verdict (LiveLaw)
• PMNRF v. Aseem Takyar — Indian Kanoon
• Does NPCI Fall Under RTI? — Medianama
• Neeraj Sharma v. NPCI — CIC Judgment (CaseMine)
• Airtel Payments Bank LPG Subsidy Scandal — Rethink Aadhaar
• PM-CARES Fund and the Right to Information Act — ICLP Guest Post
• Ordinance Issued to Make PM CARES Donations Tax Free — Economic Times
• Digital Public Infrastructure and the Emergence of State-Backed ‘Alt Big Tech’ — Smriti Parsheera (CASI)