In South Asia, by the Bay of Bengal and the Arabian Sea lies the second most populous country in the world, India. The country remains in poverty despite decades of work by development programs. However, one program that has proven effective is the Smart Card India initiative. A Smartcard is a plastic card with a built-in microprocessor, used for many purposes such as financial transactions and personal identification.

The Indian government uses Smartcards to aid people living below the poverty line. In Tamil Nadu, a rural region, impoverished people use Smartcards to take advantage of medical facilities and to find improved healthcare. In Bhubaneswar, Kerala, and Amritsar farmers use Smartcards to take out bank loans. Meanwhile, in New Delhi, the cards were used for parking, school administration and metro travel through cities including Mumbai, Bangalore, and Kolkata.

Overcoming Barriers

Overall, India’s state-sponsored welfare programs are inefficient; only 15% of investments in social programs reach the people in need. This corruption overburdens state finances and lowers the prospective influence of government programs. Shifting benefits using payment systems that incorporate biometric authentication to substantiate recipients’ identities can help in spreading awareness on the matter. Inviolable electronic transfers in India can lower dealings costs and financial outflows.

Innovative wages technologies such as Smartcards can improve corrupt and lagging public welfare programs. These programs have not fully utilized the Smart Card India initiative. Nevertheless, there was an increase in payment speed and a decrease in corruption with the implementation of the initiative. Additionally, Smartcards are inexpensive, and beneficiaries tend to like them.

While there are many benefits to the Smartcard system, there are also some drawbacks. The transition to electronic payments burdens those who opt-out of the Smartcard program. Similarly, program users may misplace their cards or experience technical difficulties.

Smartcard Case Study

In southeast India, the Andhra Pradesh government use Smartcards to distribute welfare. The government planned to use Smartcards for a variety of initiatives; however, they have focused on two social welfare enterprises. The Social Security Pensions (SSP) provides monthly allowances to the disabled and elderly, and the Mahatma Gandhi National Rural Employment Scheme (NREGS) ensures rural households a hundred days of paid employment every year.

The time it took NREGS beneficiaries to collect payments plunged from 112 minutes to 21 minutes. The new Smartcard system also lowered the delay between receiving payment and working on an NREGS project from 34 days to seven days. Welfare recipients of NREGS in Smartcard system locations received weekly earnings that went from 146 rupees to 181 rupees. There was no crucial influence on the quantity the government spent on NREGS, which meant there was a depletion of leakages. The benefits from the SSP remained fixed, however, there was a 47% reduction in bribes for payment. Satisfaction with the new payment system was assured with 91% of SSP beneficiaries and 84% of NREGS beneficiaries finding it advantageous.

Additional Benefits

The Smartcard system is cost-efficient: management of the payment system costs the government $4 million. However, savings counterbalance this cost. Through the NREGS, there was a profit of beneficiary time savings of $4.5 million. Additionally, the Smartcard system diminished leakage from the SSP by $3.2 million per year, which is greater than the price of the project. The leakage minimizations symbolize redistributions from corrupt officials to recipients.

This program is designed to improve the lives of the needy by creating a quicker and honest payment process. The Smart Card India initiative has lowered transaction time, decreased leakages, and augmented beneficiary gratification. Hopefully, innovative technology will continue to improve future welfare programs with the Smartcard program leading the way.

– Shalman Ahmed
Photo: Flickr