Working Paper: NBER ID: w19999
Authors: Karthik Muralidharan; Paul Niehaus; Sandip Sukhtankar
Abstract: Anti-poverty programs in developing countries are often difficult to implement; in particular, many governments lack the capacity to deliver payments securely to targeted beneficiaries. We evaluate the impact of biometrically-authenticated payments infrastructure ("Smartcards") on beneficiaries of employment (NREGS) and pension (SSP) programs in the Indian state of Andhra Pradesh, using a large-scale experiment that randomized the rollout of Smartcards over 158 sub- districts and 19 million people. We find that, while incompletely implemented, the new system delivered a faster, more predictable, and less corrupt NREGS payments process without adversely affecting program access. For each of these outcomes, treatment group distributions first-order stochastically dominated those of the control group. The investment was cost-effective, as time savings to NREGS beneficiaries alone were equal to the cost of the intervention, and there was also a significant reduction in the "leakage" of funds between the government and beneficiaries in both NREGS and SSP programs. Beneficiaries overwhelmingly preferred the new system for both programs. Overall, our results suggest that investing in secure payments infrastructure can significantly enhance "state capacity" to implement welfare programs in developing countries.
Keywords: biometric smartcards; state capacity; welfare programs; India; corruption; NREGS; SSP
JEL Codes: D73; H53; I38; O30; O31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| smartcard payment system (E42) | payment timeliness (J33) |
| smartcard payment system (E42) | payment predictability (G35) |
| smartcard payment system (E42) | reduction in corruption (H57) |
| smartcard payment system (E42) | reduction in time spent collecting payments (J33) |
| smartcard payment system (E42) | faster payment collection (J33) |
| smartcard payment system (E42) | increased proportion of households reporting work on NREGS (R20) |