A Friend Indeed: Does The Use of Digital Identity Make Welfare Programs Truly Counter Cyclical?

By Sumit Agarwal, Shradhey Parijat Prasad, Nishka Sharma, Prasanna Tantri Apr 02, 2019



MNREGA is World’s largest workfare program launched in 2006 to provide employment to rural poor who enrol under it. Job cards are issued to the employees by the officials. But the scheme could not fulfil its goal due to the presence of intermediaries that led to leakages by the time payments reached the beneficiaries. In order to fill the gaps of inefficiencies created by MNREGA, Aadhaar Linked Payment system was enforced.  The biometric-enabled Aadhaar provides a credible authentication service. Aadhaar is the Unique Identity (UID) number given by the UIDAI to all residents of India. The government rolled out ALP for MNREGA in two phases- first in 300 districts in 2015 then covering the remaining districts in 2016.

The paper utilizes MNREGA data from 2012 to 2017 which includes information about employment and working days, temperature and precipitation data to show adverse weather conditions as an indication of economic distress for people engaged in agricultural activities.

It is found that supply of work under MNREGA decreased significantly during economic distress. However, after the introduction of Aadhaar linked payments, there has been an increase in households (persons) that demand work under MNREGA by 16.36% (17.75). Households (persons) allotted work increased by 16.28% (17.37%). The beneficiaries became more responsive to direct transfer of benefits to their accounts. Total muster rolls filled, total households worked, total persons worked, total person days, total household reached 100 days increased under ALP. Thus, the study contributes to the existing literature by evaluating the implementation of MNREGA and the benefits reaped by it before and after the technology intervention.