Authentication and targeted transfers: experimental evidence from India

Abstract

In developing countries, the state often has limited capacity to effectively target transfers. We examine the effects of enhanced authentication technology on the performance of India's largest targeted transfer scheme, the Public Distribution System. We conduct an experiment at scale with the state government of Jharkhand, randomizing the rollout of "Aadhaar"-based biometric authentication. On its own, this reform had little effect on corruption or on average beneficiary access to transfers while slightly increasing transaction costs. When paired with new protocols for reconciling supply chain balances using data from authenticated transactions, however, it significantly reduced both corruption and beneficiary access (and was swiftly suspended). Contrasted with results from (our own) earlier work, these findings highlight the importance of “construct validity” and of political economy when extrapolating from past program evaluations to predict the effects of future reforms