Policy Wonk

Biometric Smartcard payments for welfare in Andhra Pradesh, India

Headline result
−41%
leakage of job-scheme wage funds
RCT
Implemented by
Government of Andhra Pradesh
Type
State / regional government
Where
India
Region
South Asia
When
2010–2012
Evidence
Randomized controlled trial

The challenge

Officials skimmed welfare money through fake work claims and slow, opaque cash payments.

The case

From 2010 the government of Andhra Pradesh paid workers in the national rural employment guarantee scheme (NREGS) and social pensioners through biometric Smartcards, with cash handed out by local bank agents after fingerprint checks. Researchers worked with the state to randomize the rollout across 157 sub-districts covering about 19 million people. Even though the rollout was incomplete, workers in treated areas were paid 5.8 to 10 days sooner and spent 20% less time collecting payments. Household NREGS earnings rose 24% while government outlays did not change, implying a 12.7 percentage point (41%) fall in leakage. Pension leakage fell by 47%. Time savings to workers alone matched the cost of the system.

Why it worked

Making it harder to claim money for work that never reached a real person cut theft without cutting people out of the program. Building secure payment systems can be one of the most cost-effective anti-corruption tools a state has.

Sources