Role of Information Provision in Improving Public Service Delivery

Informal monitoring and enforcement can increase the efficacy of public service delivery. Nagavarapu and Sekhri study the Targeted Public Distribution System of India and find that Scheduled Castes (SC) have a higher take-up of government subsidised food when facing SC delivery agents. The researchers provide evidence suggesting that this effect works through increased informal monitoring and enforcement when the delivery agent is corrupt. They then estimate a structural model and show that the welfare that SC households would gain from lowering monitoring and enforcement costs - an amount equivalent to moving from a non-SC shopkeeper to a SC shopkeeper - are important, equaling approximately one-fifth of the average subsidy amount. Additionally, expanding the generosity of the programme - as envisioned in the proposed National Food Security Bill - can perversely lower welfare for SCs and non-SCs due to increased incentives for black-marketing.