In 2006, the Government of Andhra Pradesh, in southeast India, started an initiative to shift towards using "Smartcards" to transfer government benefits to the poor. Smartcards were used to make payments for two large social welfare schemes: the Mahatma Gandhi National Rural Employment Scheme (NREGS)—which guarantees rural households 100 days of paid employment per year—and Social Security Pensions (SSP) —which makes monthly payments to elderly, widowed, and disabled individuals. In 2010, facing several logistical challenges, the government decided to restart the program in eight districts where the Smartcards had yet to be rolled out. These eight districts, which are spread throughout the state, have a combined rural population of about 19 million people.
We used a randomized evaluation to assess the impact of Smartcards on program performance, including speed and ease of access,
leakages in NREGS and SSP, and the welfare of program beneficiaries. We partnered with the Government of Andhra Pradesh to randomize the roll out of the program in the eight districts that had not yet received Smartcards in three waves over two years. The Smartcard program was introduced in 112 mandals (sub-districts) in the first wave (treatment group), 139 mandals in the second wave (buffer group), and the remaining 45 mandals in the third wave (control group). The analysis compared the first wave to receive the program with the third wave of mandals, where Smartcards were not introduced until after the final survey.
The program introduced two major changes to the existing payment system: it required beneficiaries to biometrically authenticate their identity before collecting payments, and it delivered payments through a Customer Service Provider (CSP) in each village, rather than at a more distant post office. When beneficiaries enrolled in the Smartcard program, their fingerprints and a photograph were taken, and they were issued a bank account and a Smartcard, which contained a chip storing the biometric and bank account information.
In order to collect a payment, beneficiaries visited the local CSP, who was usually a secondary school-educated woman from a traditionally disadvantaged caste who resided in the village. The CSP kept a small device which could read the beneficiary’s fingerprint and match it with the details stored in the Smartcard. If the match was successful, the CSP disbursed cash and the authentication device printed a receipt.