The Aadhaar programme launched by the UPA government has been "enthusiastically" supported by the current government led by Prime Minister Narendra Modi, said Mr Nilekani, 62, non-executive chairman of software firm Infosys.
"It has also saved the government about $9 billion in fraud and wastage because by having that unique number you eliminate fakes and duplicates from your beneficiary and employee list," Mr Nilekani said at a discussion organised by the World Bank on digital economy.
"We have about half-a-billion people who have connected their IDs directly to bank accounts. The government has transferred $12 billion into bank accounts electronically in real-time to the world's largest cash transfer system. There are many many things like that," he said.
India is the only country in the world where a billion people can do completely paperless, cashless transactions on their mobile phones using this infrastructure which dramatically reduces costs, Mr Nilekani said. "I'm a big believer that if you build the right digital infrastructure, then you can leapfrog."
The technocrat said the World Bank has done a great job in promoting the concept of digital ID. A high-level panel representing several countries met at the bank yesterday to discuss the future of digital ID systems.
"It says for national security, for prevention of crime, protection of revenue, or for social welfare," Mr Nilekani said, adding every time the government circumscribes privacy, it has to be a law and must be reasonable.
The question of how data use can solve inequality has not been discussed enough, Mr Nilekan said. "When the internet happened in the West in the last 15 years... the West was economically rich before they became data rich."
But in developing countries, people have become data rich before they became economically rich, Mr Nilekani said.