Biometric Smartcards and payment disbursement: a replication study of building state capacity in India

Abstract

ABSTRACTMost low- and middle-income countries lack the infrastructure to efficiently process and deliver payments to beneficiaries of welfare programs. As a result, many poor people are financially excluded or receive only a portion of the funds intended for them. There are few empirical studies for policy reference to identify and justify potential returns of public investment in building technology-based infrastructure. This study replicates a recent experimental study that fills this empirical gap by examining the effect of biometrically authenticated payments, ‘Smartcards,’ on India’s two largest welfare programs (a work-for-payment scheme and a national pension program). We evaluate the original study’s findings and obtain comparable outcomes – that Smartcards decrease the time lag for recipients to receive funds, reduce leakages of benefits and increase enrollment rates in the two programs. We also examine the robustness of the original study to outliers, alternative model specifications, changes in estimation methods and treatment effects heterogeneity bias.