Scaling up a new funds-flow mechanism for government payments in India (Phase 2)

Low administrative capacity and pervasive corruption constrain the performance of social programs in many developing countries. However, e-governance mechanisms may be a promising way to mitigate this problem by reducing the number of agents acting as intermediaries and making public service delivery more efficient. Evidence from a randomized evaluation of a large public employment program in India, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), found that one such mechanism reduced leakage by decreasing the number of potential bribe-takers in the system, and increased the efficiency of funds distribution by reducing the idle funds in the system. Building on this work and a previous GPI grant, the J-PAL South Asia policy team temporarily placed a staff member within the Ministry of Rural Development to support the government in scaling up the policy lessons from the MGNREGS study nationwide. The 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.