BREAD Working Paper No. 494, October 2016
E-governance, Accountability, and Leakage in Public Programs: Experimental Evidence from a Financial Management Reform in India
Esther Duflo, Abhijit Banerjee, Clement Imbert, Santhosh Mathew, Rohini Pande
In collaboration with the Government of Bihar, India, we conducted a large-scale experiment to evaluate whether transparency in fiscal transfer systems can increase accountability and reduce corruption in the implementation of a workfare program. The reforms introduced electronic fund-flow, cut out administrative tiers, and switched the basis of transfer amounts from forecasts to documented expenditures. Treatment reduced leakages along three measures: expenditures and hours claimed dropped while an independent household survey found no impact on actual employment and wages received; a matching exercise reveals a reduction in fake households on payrolls; and local program officials’ self-reported median personal assets fell.
Keywords: transparency, financial reform, leakage, audits, workfare
JEL classification codes: H11, O2