Building State Capacity: Evidence from Biometric Smartcards in India

53 Pages Posted: 24 Mar 2014 Last revised: 23 Feb 2023

See all articles by Karthik Muralidharan

Karthik Muralidharan

University of California, San Diego (UCSD)

Paul Niehaus

University of California, San Diego (UCSD)

Sandip Sukhtankar

Dartmouth College

Date Written: March 2014

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.

Suggested Citation

Muralidharan, Karthik and Niehaus, Paul and Sukhtankar, Sandip, Building State Capacity: Evidence from Biometric Smartcards in India (March 2014). NBER Working Paper No. w19999, Available at SSRN: https://ssrn.com/abstract=2413347

Karthik Muralidharan (Contact Author)

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

Paul Niehaus

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

Sandip Sukhtankar

Dartmouth College ( email )

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