How Did India’s Aadhaar-Linked Payments Achieve a 12.7% Reduction in Welfare Leakage?
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Synopsis
Discover how India's adoption of Aadhaar-linked digital payments has led to a remarkable 12.7% reduction in welfare leakage, showcasing a global benchmark for public welfare integrity. This innovative approach strengthens trust and maximizes the impact of public spending for citizens.
Key Takeaways
- 12.7% reduction in welfare leakage with Aadhaar-linked payments.
- Potential $10 billion annual savings by eliminating fraud.
- Strengthened delivery of food rations, pensions, and subsidies.
- Integration of digital tools enhances tax compliance.
- Boosts trust in public institutions through transparency.
New Delhi, Dec 22 (NationPress) A recent report reveals that states implementing Aadhaar-based digital payments and biometric verification have successfully decreased welfare leakage by about 12.7 percent, establishing a global standard for public welfare accountability. The report, published by the Boston Consulting Group (BCG), highlights that governments around the world allocate over $21 trillion in public payments to their citizens each year, with roughly $3 trillion lost due to fraud, errors, or inefficiencies.
In India, the utilization of biometric verification and direct digital transfers has strengthened the delivery of essential goods and services, including food rations, social pensions, LPG subsidies, fertilizer support, and wages for rural employment. This has significantly reduced dependency on intermediaries and lowered administrative expenses, as per the report.
According to estimates from the World Bank, India could potentially save up to $10 billion each year by eliminating fraudulent claims, duplicate identities, and intermediaries through Aadhaar-enabled systems.
Aadhaar has not only decreased administrative costs but also curbed leakages in some of the largest social subsidy programs globally. Evidence from states such as Andhra Pradesh, Jharkhand, and Rajasthan indicates enhanced delivery without excluding genuine beneficiaries.
“India's swift embrace of digital infrastructure, particularly in public service delivery and payments, enables it to embed integrity from the ground up. AI-driven integrity solutions can drastically diminish leakage in welfare programs, bolster trust in institutions, and ensure that public expenditure yields maximum benefits for citizens,” stated Mario Gonsalves, India Leader, Public Sector Practice, BCG.
The Central Government has transferred more than Rs 3.7 lakh crore directly into the bank accounts of over 11 crore farmer families under the PM Kisan Samman Nidhi (PM-KISAN) Yojana.
Integrating the Public Financial Management System (PFMS) with Digital Payments and Direct Benefit Transfer (DBT) has guaranteed that subsidies and welfare benefits reach the intended recipients, thereby minimizing leakages and duplication.
Moreover, these strategies, combined with digital tools for revenue generation like e-invoicing, e-way bills, and faceless assessments, have expanded the tax base and reduced evasion. Collectively, these measures have fortified revenue streams and contributed to improved fiscal balance without raising tax rates.
Point of View
It's imperative to recognize India’s strides in welfare transparency through Aadhaar-linked payments. This innovative system not only reduces leakage but also reinforces the public's trust in government initiatives. Such advancements are crucial for enhancing the effectiveness of social programs and ensuring that benefits reach those who need them most.
NationPress
23/12/2025
Frequently Asked Questions
What is Aadhaar-linked payment?
Aadhaar-linked payment refers to the use of India's unique identification system to facilitate direct digital transfers of welfare benefits, ensuring that they reach intended recipients without intermediaries.
How much has welfare leakage been reduced?
States that adopted Aadhaar-linked payments have achieved a reduction in welfare leakage by approximately 12.7%.
What are the benefits of biometric authentication?
Biometric authentication helps to verify identities accurately, reducing fraud and ensuring that welfare benefits reach the rightful beneficiaries.
What are the financial benefits of Aadhaar systems?
India could potentially save up to $10 billion annually by eliminating fraudulent claims and duplicate identities through Aadhaar-enabled systems.
What impact has Aadhaar had on public welfare programs?
Aadhaar has strengthened last-mile delivery of essential services and reduced administrative costs across major social subsidy programs.
