A transformative odyssey: The impact of Smart Payments in benefit delivery

With government-to-person (G2P) payments, governments increasingly disburse welfare benefits directly to individuals or households. While promising, digital G2P payments remain in their early stages, and face challenges, such as friction in payments, information gaps, and contextual barriers. The MUKTA program in Odisha, India, is an example of a multi-stakeholder collaboration to reengineer digital systems and government policies and processes to operationalize digitally-enabled Smart Contracting and Just-in-Time funding systems (JiT-FS).


How far would a dollar go if it went straight to someone in need when they need it most?

With government-to-person (G2P) payments, governments increasingly disburse welfare benefits directly to individuals or households. These high-volume, low-ticket-size G2P transactions are vital to boost financial inclusion and empower vulnerable communities. Globally, programs such as Brazil’s Bolsa Familia and Zambia’s supporting women’s livelihoods (SWL) report cost savings, leak reduction, and timely payments for grant recipients through digital payments. In India, Jan Dhan bank accounts, Aadhaar for identity verification, and mobile payment applications enabled by the Aadhaar Enabled Payment System (AePS) and Unified Payments Interface (UPI) have boosted financial inclusion. These have allowed government programs to incorporate direct benefits transfers (DBT).

While promising, digital G2P payments remain in their early stages, and face challenges, such as friction in payments, information gaps, and contextual barriers. The MUKTA program in Odisha, India, is an example of a multi-stakeholder collaboration to reengineer digital systems and government policies and processes to operationalize digitally-enabled Smart Contracting and Just-in-Time funding systems (JiT-FS). It has enhanced program’s reach, improved observability, and provided a clear understanding of performance bottlenecks. Additionally, it has empowered stakeholders to refine and optimize the system continuously.

Admirable goal, administrative friction

MUKTA is a pioneering initiative designed to generate wage employment for vulnerable workers in urban Odisha during the COVID-19 pandemic. Rooted in community needs and responsive to local demands, MUKTA uses existing community-based organizations (CBOs) to execute public works projects that are sustainable and climate resilient. These CBOs enlist wage seekers to work on these projects and generate income for them.

Delayed payments to CBOs and wage seekers were a key challenge in program implementation. Beneficiaries faced lengthy wait times. Additionally, a baseline study across two pilot urban local bodies (ULBs) found that more than 50% of completed tasks were not processed for payment, and the rest encountered delays that exceeded one month. Wage seekers come from low-income households, and such delays undermine the program’s welfare objectives.

Such delays arise largely from cumbersome, paper-based compliances, billing, and verification processes. Every step—from attendance tracking and bill submission to verification, approvals, and payment instructions—relied on manual processes. It increased the administrative burden on local government personnel, who were overburdened already. These long-drawn processes also resulted in the underutilization of sanctioned funding as funds were parked idle in banks and had limited transparency.

Making processes and payments smarter

These challenges threatened to undermine MUKTA’s goals. It was clear that a transformative intervention was required. MUKTA embraced a three-phase “Smart Payments” approach to address these challenges:

  • Discovery: The identification of pivotal problems in program implementation

Extensive consultations with stakeholders at each government tier helped identify key requirements to complete payments under the MUKTA program and administrative inefficiencies that prevented timely completion. The tiers included the Finance Department (FD), Housing and Urban Development (H&UD) Department, local government officials, and CBO representatives.

Such programs require multi-entity coordination. Project definition, estimate creation, progress monitoring, and bill approval occur at the local government level. The state government sanctions overall fund tranches and executes electronic payments. The first step in the solution was to identify the information the state government would need to disburse payments and find a way to communicate it most efficiently. We used existing Integrated Financial Management System (IFMS) and Public Finance Management System (PFMS) data standards to develop functional requirement specifications. This further led to the development of a two-part solution: MUKTASoft, which streamlines processes and reporting through program implementers, and JiT-FS, which simplifies and speeds up fund disbursal.

  • Design: Solution development and reform proposal

MUKTASoft is a workfare program management platform that streamlines project management and information flow among CBOs, local government bodies, H&UD, and FD. The expedited flow of standardized project information is key to reduce payment delays. MUKTASoft’s key operational components include project finalization, wage-seeker registration, digital attendance tracking, expense logging, and payment verification. All of these are streamlined through user-friendly interfaces for different users, such as CBO and ULB officials, among others.

MUKTASoft was designed to improve the overall efficiency of local and state government officials with consideration of the administrative burden-related challenges. This was done by:

  • The simplification of project progress tracking and wage payment approval. It sought to move from more than twelve steps, as identified in the baseline, to a simple three-step approach for each key document, which would involve the maker, checker, and approver;
  • The enhancement of the visibility of project progress or delays in payments. This ensured that the responsible authority or individual takes accountability for the problems. It also enabled them to take steps to resolve these problems;
  • Faster payments to wage seekers through Smart Payments through direct integration with the state IFMS.

The alignment of project management and program verifications set the stage to integrate Smart Payments and use digital technologies, such as JiT-FS, for pull-based release of funds once project milestones were achieved. Core PFM principles, such as “single source of truth” (to ensure data accuracy), “observability” (real-time tracking of performance), and “minimization of administrative burden” through smart contracts, have been woven into the design of both MUKTASoft and JiT-FS to strengthen transparency, accountability, and efficiency in the system.

  • Deployment: Orchestration of a seamless implementation

The implementation phase required multiple dependencies’ management. A fundamental challenge was to build trust and reliability in the solution to replace manual ways of working because of its high success rate. The deployment timeline faced disruptions, and development hurdles were common initially, as is typical when new systems are integrated for the first time. However, collaborative testing uncovered edge cases that affected transaction success rates, and a robust user testing phase helped validate various scenarios and user needs.

Checks and balances were introduced and implemented within MUKTASoft and the JiT module to address these emerging issues. For instance, at the project finalization stage, MUKTASoft checks for the availability of funds to cover the project’s expenses. This sanction validation establishes a spending ceiling before the approval of projects or payments. This was a key control that the State Finance Department must maintain. Similarly, when payments are directly transferred to wage-seekers’ bank accounts, each transaction’s success or failure must be checked, and corrective measures must be taken where payments fail.

Local governments, while initially hesitant, saw that MUKTASoft’s use for project creation, estimate approval, and work orders had tangible benefits. These included reduced administrative burden, fewer delays, faster payments, and enhanced accountability. With a clear demonstration of the value to all stakeholders, the adoption of the solution became universal.

Maximized impact: Outcomes of successful deployment

  • Reduced delays: The digitization of processes from attendance tracking to payment verification dramatically streamlined workflows, which facilitated the disbursement of payments to wage seekers and CBOs. Pilot data indicates around a 60% reduction in payment disbursement time for wage seekers. Under the new system, beneficiaries no longer have to wait months to get paid, as most bills are now processed in a matter of days.
  • Enhanced efficiency: Automation freed local government officials from administrative burdens. This allowed them to focus on project management and monitoring and led to improved project execution and resource use.
  • Transparency and data-driven decision-making: The integrated data platform enabled real-time tracking of project progress, expenditure, and beneficiary coverage, which enhanced transparency and accountability for all stakeholders. Insights from real-time data facilitated informed decision-making for administrators. This allowed quicker identification and resolution of bottlenecks and strategic allocation of constrained resources.
  • Empowering wage seekers: Timely wage payments and improved project execution under the Smart Payments system enhanced urban communities’ livelihood opportunities and overall well-being.

Lessons learned:

The system is being scaled to 25 ULBS out o 115 in Odisha after the pilot’s success in two ULBs. MUKTA’s journey offers valuable lessons for other G2P initiatives that seek to use technology for efficient PFM and inclusive development:

  • Existing infrastructure matters: Wage seekers’ enrolment is simplified through Aadhaar’s use for identity verification. Wage seekers’ mapping to bank accounts is already in place, with Aadhaar linked to Jan Dhan UPI’s widespread use addresses concerns around cash in and cash out. MUKTASoft and JiT-FS are a new wave of innovations that rely on the building blocks provided by India Stack and related reforms.
  • Process streamlining is a key lever for any tech-enabled reform: When workflows are digitized, with automation and minimized manual intervention, the time and effort users have to spend on administrative tasks decreases. They can focus on tasks that require human interaction or attention. At the same time, data’s reliability and timeliness improve, which enables administrators to manage performance better, and policymakers can develop data-driven plans and strategies.
  • Active and consistent collaboration: Strong partnerships between government, technology providers, and frontline users, which include grassroots organizations, are essential for successful implementation. The solution will be used when stakeholders feel ownership over it. For this, they should be involved throughout the process, with their needs being prioritized in the product design.
  • Data fragmentation undermines progress at all stages: All stakeholders must accept a “single source of truth.” which they contribute to by ensuring that all transactions take place through a single system of record. Although, it may require some transition period to achieve this goal, data should be updated promptly in the system of record, with appropriate verification or triangulation.
  • Adoption requires users to trust the new way of working: Adoption is not instant. Extensive training and support are essential to overcome initial resistance. As each set of stakeholders sees the new system’s benefits, they will be more likely to use it and advocate for it with their peers. This can also be used in periodic retraining as trained resources move and new resources join the department.
  • Adaptability is essential: Unforeseen challenges are inevitable. Flexibility and a willingness to find solutions are crucial for successful implementation.

Other G2P programs can unlock technology’s transformative potential to deliver effective social safety nets, empower vulnerable communities worldwide through these lessons, and build upon MUKTA’s success.

Smart Payments as a catalyst for inclusive development

The early success observed with Smart Payments for the MUKTA program underscores technology’s transformative potential in G2P transactions to reduce delays in service delivery and heighten public finance efficiency. It serves as a model for government agencies and prompts them to adopt smart payments as a catalyst for inclusive development.

Odisha’s journey is a model for an efficient and citizen-centric benefit delivery system, which emphasizes the need for adaptive strategies, collaborative partnerships, and a commitment to governance principles. Tailored to the local context, the solution can progress from basic Smart Payments, that encompasses digital recording of conditional payments and compliances, to a medium level incorporating workflow management systems and APIs. The ultimate moonshot solution integrates artificial intelligence or machine learning models, smart devices, and Internet-of-Things (IoT) to revolutionize the public finance landscape.

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Written by


Ritika Singh


Prashanth Chandramouleeswaran

Associate Director - Public Financial Management Program, eGov Foundation

Ameya Naik

Head of Policy and Advocacy, eGov Foundation