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
- Muralidharan, K., Niehaus, P. & Sukhtankar, S. (2016). Building State Capacity: Evidence from Biometric Smartcards in India. American Economic Review 106(10).
- Muralidharan, K., Niehaus, P. & Sukhtankar, S. (2014). Building State Capacity: Evidence from Biometric Smartcards in India. NBER Working Paper 19999.
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