The Aadhar scheme gives every citizen a unique 12-digit identity number linked to the person's biometrics. It was introduced in 2009.
The Aadhar scheme has been designed as a radical overhaul of the country's $61-billion or 3.72 lakh crore welfare system. It allows the government to make cash payments directly to the needy.
The scheme has been challenged by activist Aruna Roy, a former Karnataka High Court judge K Puttaswamy and others. Some say that the privacy of citizens is being violated by the collection of their biometrics, and the information collected can be misused.
The top court today made it clear that biometric data collected from citizens cannot be shared with anyone. The Goa police had sought information about those who've enrolled with the Aadhar scheme in connection with a young child's unsolved gang-rape in the state.
Once every citizen has been enrolled, only those with a UID (unique identity) and a bank account will be able to receive direct cash transfers from the government for their entitlements.
The scheme's database of biometrics which includes scanned irises and fingerprints will, when complete, be the largest of its kind in the world.
The idea of the electronic cash transfer scheme is to combat corruption by removing middlemen who often demand bribes to dispense subsidised products or services and to plug leakages of subsidised grain, fuel and fertilizer.
The government also sees cash transfers as making welfare schemes easier to monitor and reform if necessary.
The Aadhar scheme is being rolled out by the Unique Identification Authority of India or UIDAI, till recently headed by Nandan Nilekani, who co-founded software giant Infosys. He is now contesting the national election as the Congress candidate from Bangalore South.
The government says it has already spent nearly 50,000 crores on the scheme.