India is one of the two countries in the world that has been lauded by the International Monetary Fund for their push to digitisation. Find out what IMF says about India's digitisation push.
India is one of the two countries in the world that has been lauded by the International Monetary Fund for their push to digitisation. “…the experiences of India and South Africa show how digitalization can help improve social protection and the delivery of public services,” said IMF in its April Fiscal Monitor report.
Digital tools can improve the quality and delivery of public services, such as communicating with beneficiaries and monitoring public servants. In this regard, use of Biometric technology to “identify and authenticate” individuals can help reduce leakages and improve coverage of social programs, the IMF said.
While digitisation is less common in low-income groups, IMF said, “With more than 1.2 billion registered citizens in India’s biometric identification system, Aadhaar, the country stands out as a leader in this area.” India has applied digital tools in the distribution of social benefits, IMF said, adding, Estonia and Kenya have taken the advantage of new technologies and pursued digital strategies that fundamentally affect the delivery of public services.
In 2012, an estimated 36% of total spending on the Indian Public Distribution System never reached intended households because of ghost beneficiaries and the illegal diversion of subsidized goods by intermediating dealers. The report said that India’s biometric system also helped in reducing subsidies in LPG leakages.
Before 2015, the subsidy on liquefied petroleum gas (LPG) in India was subject to substantial leakages because of corruption and fraud resulting from dual pricing system that allowed dealers to sell LPG cylinders to households at a subsidised price and to commercial users at market price and the government’s inability to authenticate program beneficiaries. Limited authentication also led to the proliferation of ghost beneficiaries and duplicate claims.
Digitalisation helped reduce leakages in two ways, IMF said. By starting Aadhaar system, the government was able to prevent claims of benefits for ghost beneficiaries or multiple claims of the same benefit. And, the government eliminated the dual pricing system and made electronic transfers of the subsidy directly to the Aadhaar-linked bank
account of beneficiaries, bypassing dealers.
On South Africa, the IMF said that the biometric system in the country also helped in decreasing ghost-recipients of social benefits.