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• W2184913260 abstract "In many developing countries, pervasive corruption and evasion often undermine the provision of public programs. I focus on India where a large universal program provides USD 8 billion in fuel subsidies for domestic cooking. The subsidy given to households, combined with taxes on commercial users, gives rise to a black market, where fictitious “ghost” beneficiaries are used to divert the subsidy from the domestic to the commercial sector. This paper studies the impact of a policy introduced in 2013 that makes biometrics-based Unique Identification (UID) mandatory for beneficiaries of the program in order to improve the state’s capacity to purge ghost beneficiaries. The analysis is based on unique data that combine the administrative records from 23 million fuel purchase transactions and distributor-level fuel sales, with a novel survey data set which allows me to infer black market prices. My empirical strategy exploits two quasi-experiments: (i) the phase-wise policy roll-out across districts and (ii) its unexpected termination. I document four main findings: (1) the UID-based transfer policy reduces fuel purchases in the domestic fuel sector by more than 11%, suggesting a reduction in subsidy diversion; (2) after the policy is terminated, fuel purchases in the domestic sector revert to a similar level that existed before the policy was introduced; (3) a positive supply shock induced by the policy termination reduces black market prices between 13% to 19%, and; (4) in response to the lower prices, commercial firms reduce their fuel purchases in the formal sector and re-enter the black market for fuel. In sum, this paper illustrates that investment in enforcement capacity can significantly strengthen the state’s ability to target program beneficiaries." @default.
• W2184913260 created "2016-06-24" @default.
• W2184913260 creator A5066484343 @default.
• W2184913260 date "2015-01-01" @default.
• W2184913260 modified "2023-09-27" @default.
• W2184913260 title "Curbing Leakage in Public Programs with Biometric Identification Systems: Evidence from India's Fuel Subsidies" @default.
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