India's welfare leakage down 13% thanks to digital payments
What's the story
A report by the Boston Consulting Group (BCG) has found that India has reduced welfare leakage by approximately 12.7% through digital payment reforms. The study, titled "Closing the Trillion-Dollar Gap in Public Payments," highlights how technology can prevent loss or theft of funds before they reach intended beneficiaries. It also notes that governments worldwide spend over $21 trillion annually on pensions, healthcare, and other needs but lose around $3 trillion due to frauds, errors, or inefficiencies.
Impact of Aadhaar
Aadhaar-linked digital payments reduce welfare leakage
The BCG report highlights that states adopting Aadhaar-linked digital payments and biometric authentication have reduced welfare leakage by some 12.7%. This was achieved without excluding genuine beneficiaries. The study also estimates that India could save up to $10 billion annually by eliminating ghost beneficiaries and preventing multiple claims through these systems.
Accessibility
Digital tools ensure benefits reach the last person
The report highlights the success of states like Andhra Pradesh, Jharkhand, and Rajasthan in using digital tools to ensure benefits reach the last person. Millions of Indians now get their food rations, cooking gas subsidies, and work wages faster than ever. They are no longer dependent on middlemen who often siphon off a part of the money meant for them.
Global leadership
India can lead global governance reform
Mario Gonsalves, India Leader of Public Sector Practice at BCG, said that with global public payment systems losing up to $3 trillion yearly to fraud and error, India has a unique opportunity to lead the next wave of governance reform. He added that India's quick adoption of digital infrastructure in public service delivery and payments allows it to embed integrity by design.