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

Can e-governance reforms improve government policy? By making information available on a realtime basis, information technologies may reduce the theft of public funds. We analyze a large field experiment and the nationwide scale-up of a reform to India's workfare program. Advance payments were replaced by "just-in-time" payments, triggered by e-invoicing, making it easier to detect misreporting. Leakages went down: program expenditures dropped by 24%, while employment slightly increased; there were fewer fake households in the official database; program officials' personal wealth fell by 10%. However, payment delays increased. The nationwide scale-up resulted in a persistent 19% reduction in program expenditure.