Curbing Leakage in Public Programs: Evidence from India’s Direct Benefit Transfer Policy
研究印度将烹饪燃料补贴直接转入受益人银行账户的政策，发现该政策减少了补贴燃料购买量，表明黑市转移被遏制，从而提高了福利交付效率。
Targeted price subsidies create a gap between subsidized and unsubsidized prices. The resulting dual pricing can lead to arbitrage opportunities where intermediaries divert subsidized goods to unintended beneficiaries via the black market. I study India’s Direct Benefit Transfer policy for cooking fuel subsidies, which altered the existing subsidy program by transferring subsidies directly to beneficiaries’ bank accounts. The policy decreased subsidized fuel purchases, indicating a reduction in diversion to the black market. Changes in unsubsidized fuel sales and black market prices provide supporting evidence that leakage was reduced. These results suggest that addressing the underlying perverse incentives in welfare delivery can improve efficiency by curbing leakages.