Scaling up a new funds-flow mechanism for government payments in India

Low administrative capacity and pervasive corruption constrain the performance of social programs in many developing countries. The increasing promise of e-governance for delivering public services makes it possible to design mechanisms with fewer agents intermediating the delivery process. Evidence from a randomized evaluation of a large public employment program in India, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), found that such redesigns reduced leakage by decreasing the number of potential bribe-takers in the system, and increased the efficiency of funds distribution by reducing the funds float in the system. Building on this work, the J-PAL South Asia (J-PAL SA) policy team worked closely with the Government of India (GoI) to develop a roadmap to scale-up the policy lessons from the MGNREGS study and apply the same mechanism for other Centrally Sponsored Schemes of the GoI. Through this grant, J-PAL SA hired a Policy Consultant to provide full-time support to the GoI for this scale-up over the course of one year. Through support from a second grant, a staff member provided full-time support to ensure that the policy implementation plan, developed during the first year of this project, was approved and implemented. By November 2017, 21 states and one union territory had already implemented the reform, and three more states had committed to implementing it. For more on the partnership with the Ministry of Rural Development, see this story about the scale-up and this blog post from January 2018. 

* This project was funded across two funding cycles under IGI's predecessor initiative, the Government Partnerships Initiative (GPI).