Building State Capacity: Evidence from Biometric Smartcards in India

Karthik Muralidharan, Paul Niehaus and Sandip Sukhtankar

No 19999, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D73 H53 I38 O30 O31 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-dev and nep-exp
Note: DEV PE POL
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Citations: View citations in EconPapers (29)

Published as Karthik Muralidharan & Paul Niehaus & Sandip Sukhtankar, 2016. "Building State Capacity: Evidence from Biometric Smartcards in India," American Economic Review, vol 106(10), pages 2895-2929.

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