Aadhaar and Digital Payments Slash India’s Welfare Leakage by 13%, Says BCG Report

India has significantly strengthened the integrity of its public welfare systems by sharply reducing leakage through large-scale adoption of digital payment infrastructure.  

A new global study highlights how India’s reforms have improved efficiency while ensuring benefits reach intended recipients. 

Digital Reforms Drive Measurable Gains 

According to a recent Boston Consulting Group report titled "Closing the Trillion-Dollar Gap in Public Payments”, states that adopted Aadhaar-linked direct benefit transfers and biometric authentication reduced welfare leakage by around 12.7%.  

These measures curtailed fraud, duplicate beneficiaries and procedural errors without excluding genuine recipients, demonstrating that efficiency gains need not come at the cost of inclusion. 

Impact on Public Finances and Beneficiaries 

The report estimates that India can save up to $10 billion annually by eliminating fake identities and multiple claims.  

Direct digital transfers have also improved last-mile delivery, with beneficiaries receiving food rations, cooking gas subsidies and wage payments faster and with reduced reliance on intermediaries. 

Global Relevance of India’s Model 

As per report, Globally, governments disburse over $21 trillion each year on welfare, with nearly $3 trillion lost due to inefficiencies, fraud and errors. India’s experience shows how technology-led systems can embed accountability into public spending and restore trust in welfare mechanisms. 

“With global public payment systems losing up to $3 trillion annually to fraud and error, India has a unique chance to lead the next wave of governance reform. India’s rapid adoption of digital infrastructure, especially in public service delivery and payments, allows it to embed integrity by design. AI-enabled integrity solutions can significantly reduce leakage in welfare programs, strengthen trust in institutions, and ensure that public spending delivers maximum impact for citizens,” said Mario Gonsalves, India Leader, Public Sector Practice, BCG. 

Read More: December 31 Deadline for PAN–Aadhaar Linking Nears: What Should Taxpayers Do? 

Conclusion 

India’s digital welfare framework now stands as a scalable global benchmark, proving that transparency, efficiency and inclusion can advance together through technology-driven governance reforms. 

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