A new study of smartcard based payments for social security schemes in India has revealed that they “substantially improved the payment process by reducing payment delays and unpredictability.”

The study by J-PAL, a leading global research organisation on developmental issues, randomly evaluated such payments under Mahatma Gandhi National Rural Employment Guarantee Scheme (NREGS) and Social Security Pensions (SSP) in Andhra Pradesh.

“NREGS participants experienced shorter, more predictable delays in receiving payments and spent less time collecting them, leading to aggregate time savings of an estimated US$4.5 million over the evaluation,” the study found.

It found a 40% reduction in leakages under the smartcard system.

“The estimated annual cost savings from leakage reduction and beneficiary time savings amounted to US$40 million for both programs, far exceeding the US$6.3 million in implementation costs,” it added.

In India leakages under social security programmes are estimated to be over 51%.

Although government implemented biometric based payments, “these systems can be complex and difficult to implement, and little rigorous evidence exists about their impact on payment delivery,” J-Pal siad.

The research was conducted by Karthik Muralidharan and Paul Niehaus  of University of California, and Sandip Sukhtankar University of Virginia.

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