Each year, governments worldwide distribute over $21 trillion in public payments to citizens, from pensions to healthcare to income support. Yet up to $3 trillion is lost annually due to fraud, error, or inefficiency. In Indian context, the states that have adopted Aadhaar-linked digital payments and biometric authentication have reduced welfare leakage by approximately 12.7 percent, without excluding genuine beneficiaries, according to research referenced in a global Boston Consulting Group (BCG) report “Closing the Trillion-Dollar Gap in Public Payments”, explores how AI, data analytics, and better system design can help governments ensure that every dollar reaches its intended recipient.

Key Takeaways from the report:

• Significant reduction in leakages and costs: Aadhaar has lowered administrative costs and reduced leakages across some of the world’s largest social subsidy programmes. According to estimates cited from the World Bank, India can save up to US$10 billion annually through Aadhaar-enabled systems by eliminating fraudulent claims, duplicate identities, and intermediaries, without restricting beneficiary access.
• Stronger last-mile delivery of welfare: Evidence from states such as Andhra Pradesh, Jharkhand, and Rajasthan shows that biometric authentication and Aadhaar-enabled direct payments have strengthened last-mile delivery. Millions of Indians now receive food rations, social pensions, LPG subsidies, fertiliser support, and rural employment wages more efficiently, with reduced reliance on middlemen.

“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.

BCG’s analysis highlights that India’s digital public infrastructure, anchored by Aadhaar, direct benefit transfers, and biometric authentication, offers a replicable model for governments globally seeking to improve public spending outcomes without compromising access or inclusion.

[Download the full report here]