Global financial services major Morgan Stanley on Monday said in its research note that there are two issues about privacy relating to Aadhaar. One is the possible compromise of the Aadhaar system, itself, and leakage of data. The second is the loss of data through the third-party users.
India's digital leap is expected to have substantial social impact, as it will lead to reduced income inequality and increased financial inclusion, but addressing data privacy will be critical, according to the report.
While the first risk is somewhat mitigated by sophisticated encryption standards, the second risk is harder to control - third parties collecting biometric data could be compromised, leading to risk of data exposure, it added.