Secure Digital Payments

Secure Digital Payments:
Improving Public Welfare Programs
KARTHIK
MURALIDHARAN
W ITH PAUL N IEHAUS &
S A N D I P S U K H TA N K A R
HIGH COSTS OF DELIVERING
GOVERNMENT TRANSFERS
S E C U R E PAY M E N T S A S S TAT E C A PA C I T Y
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S EVERAL G ROUNDS FOR O PTIMISM
A S WELL AS S KEPTICISM
Optimism
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Reduce leakage; improve payment experience
Expand feasible set of anti-poverty policies
Leapfrog literacy constraints to Financial Inclusion
Will be a “game changer” for governance (former FM)
Skepticism
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Complex implementation challenges
Subversion by vested interests
Exclusion errors
Reduced incentives for officials to implement programs
Cost effectiveness based on untested assumptions
THE AP SMARTCARD PROGRAM
A N A M B I T I O U S P R O J E C T T H AT R E Q U I R E D
M A N Y PA R T N E R S T O S U C C E E D
J-PAL Global, CEGA, Omidyar
Network, Unique Identification
Authority of India (UIDAI),
Government of Andhra Pradesh
R O L L O U T WAS R AN D O M I Z E D AT S U B - D I S T R I C T
L EVEL IN 8 D ISTRICTS WITH 2 0 MILLION PEOPLE
A S S E S S I N G I M P L E M E N TAT I O N
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GoAP achieved 50-60% coverage in rolling out
carded payments over 2 years
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Some relevant US Comparisons
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Replacing checks with EBT in Social Security took 15 years
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Healthcare.gov
Evaluation based on “as is” evaluation under realworld implementation (and corresponding challenges)
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Several ‘process’ insights shared with Govt. of India
SIGNIFICANT POSITIVE PROGRAM
I M PA C T S O N S E V E R A L D I M E N S I O N S
OVERWHELMING SUPPORT FOR THE PROGRAM
SSP
NREGA
New system
93%
New system
91%
Old system
3%
Old system
3%
Neutral
6%
Neutral
4%
I M PA C T
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Govt. of AP
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Almost scrapped program in mid 2013
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Results presented by PS & CS to CM to continue program
Govt. of India
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Some uncertainty about program continuation with new govt.
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Results presented to PM/FM multiple times
Broader Impact
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Several public lectures in India (chaired by top officials)
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Op-eds by us as well as others
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Results used widely by other stakeholders in FI/DBT
I GAHL LC O
T S CO
LIVERING
O VH
ER
I MSPA
TFODFEA
B E TGTOEVRE-RI M
P LEENM
DS N
NM
T ETNRTAEN
F ERRE
SG S ?
SIGNIFICANT POSITIVE PROGRAM
I M PA C T S O N T H E R U R A L E C O N O M Y
T R A N S F O R M I N G T H E W E L FA R E S TAT E ?
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Secure payments allow two classes of interventions
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Most policy-relevant area may be food security
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Implement existing policies better (AP Smartcards)
Replace distortionary subsidies w/ income transfers (food, energy)
Default of PDS plagued with leakage; can cash transfers do better?
Both beneficiary preferences & nutrition impacts need to be determined
Our work in Bihar and (now) Rajasthan directly speaks to this
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Offer randomly-selected HH the option of exchanging in-kind entitlements for
an experimentally varied cash transfer
In pilots - ~80% of HH in Bihar prefer cash; take-up rate is ~60% at even half
the value of the subsidy! Nutrition impacts will be seen in the full study
Powerful way of politically de-risking the process of policy experimentation
S U M M A RY
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Secure payments can have transformative impact on the delivery
of anti-poverty programs in developing countries
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But, implementation details really matter
Theoretically-grounded rigorous empirical evaluation (and
iterative feedback into design and implementation) can be a
critical complement to the technology itself
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Rapid feedback on implementation, impact, and voter preferences
Insulate against policy-making by anecdote
Grounds marketing hype in reality (OLPC, Micro-finance)
Better design can mitigate against heterogeneity
Growing policy-maker demand for evidence at highest levels
Exciting times to be innovating and evaluating in this space