Report: How has Aadhaar helped Indian states cut welfare leakages by 12.7%

New Delhi: Indian states that implemented Aadhaar-linked digital payments and biometric authentication have reduced welfare leakage by around 12.7 per cent, setting a global benchmark in transparency and integrity in public welfare delivery, according to a new report.

The study by Boston Consulting Group (BCG) noted that governments worldwide distribute more than $21 trillion in public payments to citizens every year, but nearly $3 trillion is lost due to fraud, administrative errors and systemic inefficiencies.

Aadhaar strengthens last-mile welfare delivery

In India, the adoption of biometric authentication and direct digital benefit transfers has significantly strengthened last-mile delivery across major welfare schemes, including food ration distribution, social pensions, LPG subsidies, fertiliser support and rural employment wages. The report said these reforms have reduced dependence on intermediaries while also lowering administrative costs.

According to World Bank estimates, India could save up to $10 billion annually by eliminating fraudulent claims, duplicate beneficiaries and middlemen through Aadhaar-enabled governance systems.

BCG said Aadhaar has played a critical role in lowering administrative overheads and plugging leakages across some of the world’s largest social subsidy programmes. Evidence from states such as Andhra Pradesh, Jharkhand and Rajasthan showed improved service delivery without excluding legitimate beneficiaries.

Digital public infrastructure improves fiscal efficiency

“India’s rapid adoption of digital infrastructure, especially in public service delivery and payments, allows it to embed integrity by design,” said Mario Gonsalves, India Leader, Public Sector Practice at BCG. He added that AI-enabled integrity solutions could further reduce welfare leakages, enhance public trust and ensure that government spending delivers maximum value to citizens.

Under the PM Kisan Samman Nidhi (PM-KISAN) scheme, the Centre has transferred more than ₹3.7 lakh crore directly into the bank accounts of over 11 crore farmer families through Direct Benefit Transfer (DBT) mechanisms.

The integration of the Public Financial Management System (PFMS) with digital payments and DBT platforms has ensured that subsidies and welfare benefits reach beneficiaries directly, significantly minimising leakages and duplication.

Additionally, digital tools for revenue mobilisation, such as e-invoicing, e-way bills and faceless tax assessments, have helped widen the tax base and curb evasion. Collectively, these measures have strengthened government revenues and improved fiscal balance without increasing tax rates, the report said.

IANS