DP11761 E-governance, Accountability, and Leakage in Public Programs: Experimental Evidence from a Financial Management Reform in India

Author(s): Abhijit Banerjee, Esther Duflo, Clément Imbert, Santhosh Mathew, Rohini Pande
Publication Date: January 2017
Keyword(s): audits, financial reform, leakage, transparency, workfare
JEL(s): H11, O2
Programme Areas: Development Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11761

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.