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LATEST NEWS UPDATES | Aadhaar's $11-billion question -Jean Dreze & Reetika Khera

Aadhaar's $11-billion question -Jean Dreze & Reetika Khera

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published Published on Feb 9, 2018   modified Modified on Feb 9, 2018
-The Economic Times blog

Word has it that World Bank economists use “obviously fabricated” data from time to time. These are not Sitaram Yechury or Medha Patkar’s words, but those of Paul Romer, former chief economist of the World Bank, in a recent email exchange reported by Financial Times. Romer retracted them later, but this “may not end the controversy”, as The Economist mildly put it.

This is not the first time that World Bank economists skate on thin ice. Another recent example concerns the widely-quoted estimate of $11 billion annual savings (or potential savings) due to Aadhaar. The original source of this estimate is the Bank’s World Development Report 2016. On page 195, the report mentions that many subsidies in India “are being converted to direct transfers using digital ID, potentially saving over $11 billion per year in government expenditures through reduced leakage and efficiency gains”.

By way of source, a footnote cites a brief of the Consultative Group to Assist the Poor, prepared by Shweta Banerjee. But the $11 billion figure cited in that brief is not a savings figure at all. It is just an estimate of GoI’s total annual expenditure on “major cash transfers”.

After we drew attention to this error, others pursued the matter and the World Bank arranged for soft copies of WDR 2016 to carry a correction. The correction, however, is most intriguing, as the sentence quoted earlier remains unchanged. It is merely the note referring to Banerjee’s work that’s now replaced with a much longer footnote.

The latter invokes two studies, one suggesting that biometric smart cards helped to reduce the National Rural Employment Guarantee Act (NREGA) leakages by 10.8% in Andhra Pradesh, and another showing that the 2013-14 experiment with direct benefit transfer of liquefied petroleum gas (LPG) subsidies (DBT-L) reduced the purchase of subsidised LPG cylinders by 11-14%, “suggesting a reduction in subsidy diversion”. In both cases, technical hurdles “abounded”, to quote the first study.

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The Economic Times, 7 February, 2018, https://blogs.economictimes.indiatimes.com/et-commentary/aadhaars-11-bn-question/


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