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Governance, Digital ID, Biometrics, Financial Inclusion, Service Delivery, Subsidy Reform, Health Financing
Anit Mukherjee is a policy fellow at the Center for Global Development where he works on issues of governance, public finance, and service delivery in developing countries. His current research focuses on the impact of biometric ID and digital payment systems to reform public subsidies, improve financial inclusion, and promote gender empowerment. Previously, he coordinated a CGD Working Group on Fiscal Transfers for Health that provided recommendations to improve the effectiveness and coordination of health financing in decentralized countries for better outcomes.
Prior to joining CGD, Mukherjee was an associate professor at the National Institute of Public Finance and Policy in New Delhi from 2005-2013 where he designed and implemented innovative citizen-led public expenditure tracking surveys in education and health. As a policy advisor to the world’s largest biometric ID program, Aadhaar, he was involved in the design of direct benefit transfer of subsidies in India. Previously, Mukherjee has served as MDG financing advisor to the Government of Yemen, worked as a consultant for the World Bank and UNAIDS on financing of HIV/AIDS programs in Asia-Pacific, and designed gender-focused social protection as advisor to the Commonwealth Secretariat. Mukherjee studied economics at Presidency College, Calcutta, and Jawaharlal Nehru University, Delhi, and obtained a PhD in policy and planning sciences from the University of Tsukuba, Japan. He has published extensively in peer-reviewed journals and has been cited in major news outlets including Bloomberg, BBC, Financial Times, and NPR. His latest book, Social Sector in a Decentralized Economy: India in the Era of Globalization, was published by Cambridge University Press in 2016.
In the big decentralized countries where global disease burden is concentrated, such as India and Indonesia, most public money for health isn’t spent by the national ministry of health, the traditional counterpart for global health funders and technical agencies. Instead, most money is programmed and spent subnationally.
Greater subnational public spending reflects growing democratization, power-sharing, and local self-determination. It also responds to the conviction that local decision-makers understand local realities better than a bureaucrat sitting in the capital city. Yet evidence on the effectiveness of subnational spending on health care and outcomes is mixed at best, and incentives for greater spending and better performance can be weak.
India matters for global health. It accounts not only for about one-fifth of the global population, but also one-fifth of the global disease burden. Yet the Indian government spends only 1 percent of its GDP on public health—a paltry amount compared to what other large, federal countries like Brazil and China allocate (4.7 percent and 3.1 percent, respectively). This has a direct impact on Indian citizens who pay more out-of-pocket for health care than citizens in any other G20 country.
Most money and responsibility for health in large federal countries like India rests with subnational governments — states, provinces, districts, and municipalities. The policies and spending at the subnational level affect the pace, scale, and equity of health improvements in countries that account for much of the world’s disease burden: India, Indonesia, Nigeria, and Pakistan.
2015 has been the year we have been reminded that there have been major gains in development in many parts of the world, but that hundreds of millions of people still suffer the dangerous consequences of poverty, including high levels of maternal and infant mortality, hunger, illness caused by lack of basic sanitation, and death from easily treatable diseases. How can we improve health systems to make them more effective, as well as less wasteful and more accountable?
Reducing inequality is front and center of the current economic policy agenda. Multilateral institutions like the IMF and the World Bank have accepted that high inequality leads to macroeconomic instability and lowers growth and that lower inequality helps make growth sustainable in the long run. But there is no magic bullet.
India is getting some serious cash from coal. According to official estimates, the government will get nearly $250 billion in revenues over a period of 30 years from the sale of over two hundred coal blocks to private bidders. Given India’s record of corruption and mismanagement of natural resources, it is difficult to be optimistic that it will be able to cash in on this windfall and use it for development. But there are a few silver linings that may prove us (happily) wrong.
Reforming inefficient and inequitable energy subsidies continues to be an important priority for policymakers as does instituting “green taxes” to reduce carbon emissions. The paper outlines how the use of digital technology can help accomplishing those reforms, drawing on four country cases. The technology is only a mechanism; it does not, in itself, create the political drive and constituency to push reform forward.
Center for Global Development
WASHINGTON – As governments across the globe begin to use direct transfers to get money to citizens unable to work, a new report from the Center for Global Development (CGD) finds that just 56% of citizens across 99 developing countries have access to a phone, a bank account, and an ID. Those three things, the researchers find, are the building blocks for the successful rollout of digital government transfers, from emergency cash transfers in a pandemic to everyday government programs like pensions and food subsidies.
“Governments around the world are moving full-steam ahead to get money in the hands of their citizens who are out of work due to the coronavirus. But we found that for digital payments from governments to work well, countries need to have the digital basics in place: bank accounts, IDs, and phones. And far too many developing countries are running behind on making sure their citizens have access to those basics,” said Alan Gelb, one of the authors of the study and a senior fellow at CGD.
“There are a lot of advantages to bringing government payments online. It can cut out costly middlemen and time-wasting activities like waiting in line to pick up a ration payment, as well as providing a much stronger defense against corruption, “Gelb said. “And, in a crisis like this, it means you have the digital infrastructure ready to go for something like emergency cash transfers.
“India has been at the forefront, digitizing programs like pensions and subsidies to buy cooking gas for poor families. And what India’s experience illustrates is how you need a trio of digital basics to make payments work: a digital ID to prove a person is who they say they are, a financial account to for them receive the money, and a mobile phone that can be both an information hub and a tool to access that money,” said Anit Mukherjee, a policy fellow at CGD and another author of the study.
The researchers found that while many governments had focused on rolling out national biometric ID programs, like India’s Aadhaar system, financial inclusion is the biggest hurdle for most. About 34% of the population in the 99 countries they examined lacked a financial account, and in the lowest-performing countries, more than two thirds of the population did not have access to a financial account.
“We found that the lack of bank and mobile money accounts is the biggest gap in digital readiness. It’s hard to get money to citizens who don’t have either,” said Mukherjee.
The report found:
There are significant gender gaps in access to phones, IDs, and especially bank accounts. In sub-Saharan African countries, men were at least 9 percentage points more likely to have access to each of the three than women.
More than twenty percent of women in Pakistan don’t have access to even one of a bank account, mobile phone, or ID, four times the rate of men.
Sub-Saharan African countries tend to have relatively high rates of financial inclusion, thanks to widespread use of mobile money in many countries, led by Kenya, which did better than much richer countries on that front.
Financial inclusion remains relatively low in Latin America. While nearly 80% of Latin Americans had access to a mobile phone, barely more than 50% had a bank or mobile money account.
The good news, they found, is that building on one part of the basics helps expands others. Everything else being equal, having an ID and a mobile phone increases the likelihood that a person will have access to a financial account, particularly for groups that are disadvantaged. Also, even as access makes it easier to implement social transfers, transfers can themselves be a powerful force for increasing financial inclusion.
“None of these numbers are set in stone. Governments can and should work to expand their citizens’ access to the digital basics. And they should need to ensure that they do it in ways that don’t reinforce existing inequalities,” Gelb said.
The full report is available at https://www.cgdev.org/publication/citizens-and-states-how-can-digital-id-and-payments-improve-state-capacity.