In a 4:1 verdict Wednesday, the five-judge bench ruled that the scheme does not violate the right to privacy, a key element in a long running case challenging its constitutional validity.
The ruling, however, did introduce several new restrictions on how Aadhaar information could be used, including new measures preventing corporate bodies such as banks and mobile phone companies from accessing information.
The judgment brings an end to the current debate on the future of the program, following last August's landmark court case in which the Supreme Court ruled that privacy was a fundamental legal right.
"We see it as a big victory of the Modi government," said Sambit Patra, spokesman for Prime Minister Narendra Modi's Bharatiya Janata Party (BJP).
"The Supreme Court has upheld the constitutional validity of Aadhaar, and has also said that it does not violate privacy," he added.
Privacy concerns
The massive centralized database was initially launched in 2009 as a voluntary program to help prevent benefit fraud. Since then, Modi and his BJP-led government have championed its growth resulting in a significant expansion, both in terms of its usage and the numbers signed up.
More than 90% of the entire population is now registered in the identity program, which sees citizens issued with a 12-digit number that correlates with specific biometric data such as iris scans and fingerprints.
Though the system is voluntary, participation is required in order to access a range of welfare and social services, making opting out all but impossible for most Indians.
The program in theory meant banks and government agencies could instantly verify people's identities, but it triggered concerns over the invasion of privacy and fears that Aadhaar could be used as a mass surveillance tool by the state.
Several new security measures were introduced to the database in January this year, after an alleged security breach in which an Indian journalist was able to buy access to citizens' personal details from anonymous traders for as little as $8.
But while Aadhaar has been criticized by activists for its implementation and data leaks, it has also been lauded by tech leaders as the world's only system that has a billion people with the equivalent of a digital social security number and biometric ID.
"The whole world is marveling at our technology," said India's Law and Justice Minister Ravi Shankar Prasad in a press conference following the Supreme Court's ruling on privacy last August. "We take minimum information for maximum use."
In recent years, Modi's government has ramped up enrollment as part of its "Digital India" program, making registration mandatory for people to access crucial social benefits such as a rural wage welfare program.
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