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

Abstract

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

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