Curbing Leakage in Public Programs: Evidence from India's Direct Benefit Transfer Policy
Targeted price subsidies create a gap between subsidised and unsubsidised prices. The resulting dual pricing can lead to arbitrage opportunities where intermediaries divert subsidised goods to unintended beneficiaries via the black market.
This article studies India's Direct Benefit Transfer policy for cooking fuel subsidies, which altered the existing subsidy program by transferring subsidies directly to beneficiaries' bank accounts.
