Session 2: Public sector and programme design

M Musharraf Hossain Bhuiyan (Government of Bangladesh) chaired the second session of the day which looked at design aspects of development projects in the public sector. The first presenter, Maitreesh Ghatak (LSE and IGC India-Bihar), along with Chinmaya Kumar (IGC India-Bihar), discussed different design aspects of the Bihar cycle programme for high school children. They showed that despite high levels of inclusion and limited levels of detectable corruption, the majority of beneficiaries would have preferred to receive a bike (an “in-kind” transfer) rather than cash. Whilst the implementation of the scheme—particularly having to submit a receipt prior to receiving cash—played a role in this, the reasons behind this preference were predominantly on the demand-side; such as income levels, access to credit, and the distance to a bike store.

The second presentation, Rohini Somanathan (Delhi School of Economics and IGC India-Bihar), examined how to incorporate the differing availability of public goods into the measurement of poverty, which is primarily based on private consumption data. The research uses survey data on the availability of schooling, healthcare and subsidised food grains data from Bihar to show that accounting for the provision of public services results in a fall in overall poverty. However, it also leads to an increased spatial dispersion in poverty rates due to poor regional targeting of public spending.

Adnan Khan (LSE and IGC) presented an on-going project looking to improve the efficiency of public procurement in Punjab. Previous studies have shown that inefficiencies in public procurement can cause significant levels of wastage, mostly passive waste, rather than corruption. This project has, from the outset, been designed in close collaboration with the policymakers in Pakistan, allowing for incremental policy influence throughout the lifetime of the project. It uses a sample of cost centres to examine how procurement officers respond to changes in their processes and incentives, and then use these results to design an optimal mechanism for procurement of generic goods. The treatments being used include relaxing financial rules to ease liquidity constraints, and rewarding top performers with an annual honorarium.

The presentations also raised lively discussion from the conference audience. There were questions covering the success of the cycle scheme in limiting corruption through the visibility of the benefits and the collective action, the importance of the differing in value of in-kind and cash transfers affecting people’s preferences, the importance of intra-household dynamics when transfers are received, comparisons with private sector procurement practices in Pakistan, and the ways to ensure successful collaborations between academics and government officials. The Chair closed the session by thanking the presenters and highlighting the importance of in-depth academic work of this type for government officials in developing countries.