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How to fight fraud against government program beneficiaries in India

Posted on by Deepesh Singh

In 2023, scammers stole more than $1 trillion from victims worldwide, with Asia emerging as a hotspot for financial fraud. The Indian Cybercrime Coordination Centre (I4C) found that Indians suffered cumulative losses worth approximately $214 million (INR 1,776 crore) from January to April 2024 as a result of cyber frauds.

While digitization has revolutionized the delivery of government benefits, expanded access and minimized exclusion, it has also amplified fraud. Fraudsters have started to target government program recipients through fake messages and calls, often posing as government agencies or officials. They prey on vulnerable individuals, particularly those with low literacy levels who rely heavily on digitally disbursed government support, to trick them into giving money or revealing personal information.

MSC’s recent research with banking customers indicates a rising vulnerability among beneficiaries who receive government payments digitally into bank accounts or mobile wallets. The study uncovered a surge in fraud cases following government announcements on fund disbursement or notifications that require citizen action to continue accessing government services. These challenges pose a significant threat to the effectiveness and integrity of digital benefit delivery.

Accounts of defrauded government program beneficiaries

Case 1: Manju from Rajasthan, India, received a call from a scammer posing as a central government official, who informed her that her application for the PM Awas Yojana, a credit-linked subsidy program for affordable housing, had been selected. The fraudster asked her to submit a registration fee of $600 (INR 50,000) to finalize her residence allotment. Elated, Manju made the payment. Later, when she received no confirmation or house, she realized she had been defrauded.

Case 2: Aftab, a 70-year-old veteran daily wage worker in Dhaka, Bangladesh, benefits from the government’s old age allowance. One day, a fraudster posed as an official from the Department of Social Services and informed him that his account had been inactive and he would not receive the next payment. The scammer asked Aftab to share a code sent to him via message to reactivate his account. The fraudster then used this code to access his bank account and robbed him of all the money in his wallet account.

How do scammers entice beneficiaries who receive social payments digitally?

Fraud perpetrators continuously evolve and adapt tactics to exploit vulnerable beneficiaries. They often promise assured receipt of government benefits or create a fear of halted payments to manipulate customers into sharing sensitive details. Low digital capability and literacy make many digital payment program account holders particularly vulnerable. Their need for benefits drives them, and they often overlook privacy protection and secure banking practices, increasing their susceptibility to scammers.

One key point of vulnerability is found in the enrollment process for government programs. Beneficiaries with low literacy levels tend to need assistance with the enrollment process, so they provide physical copies of their documents to government program representatives. The representatives may hold on to these documents to complete the beneficiary’s enrollment process later, increasing the risk of data theft. Many programs also involve lengthy documentation procedures, further exposing recipients to the risk of fraud and data leakage.

Program beneficiaries may also be unaware of or unable to access official information sources on aid disbursements, such as touchpoints, officials or websites. When sophisticated fraudsters can access sensitive information, such as ID details, bank account numbers and enrollment application numbers, their calls or requests seem legitimate and can convince unaware customers to fall for their schemes.

How can the government help beneficiaries avoid becoming victims of fraud?

A customer protection-oriented approach is needed to decrease fraud among government program beneficiaries. There are a few clear steps that can be taken:

1. Education: Beneficiaries must be educated on safe banking practices. This can be done through channels already used for program-related awareness initiatives, such as websites, posters and community outreach programs. Existing digital literacy programs should incorporate a comprehensive customer protection component to enhance beneficiaries’ ability to navigate online platforms safely and securely.

2. Communication: The government should establish a centralized contact number to provide information about all government programs. This number would serve as the sole communication channel from the government, so that beneficiaries can easily identify messages which come from the official source as opposed to fraudulent messages. The government should send text messages and use interactive voice response systems (IVRS) during program enrollment and disbursement phases to alert customers. These communications should inform beneficiaries about:

a) Prevalent fraudulent activities related to government programs.

b) The importance of protecting personal information.

c) Ways to recognize fraudulent activities.

d) Clear instructions on how and where beneficiaries can seek support if defrauded.

3. Streamline and secure enrollment processes: A data minimization and proportionality approach is needed to streamline the enrollment processes for government programs and ensure beneficiaries are not asked to provide the same information repeatedly. A secure repository of beneficiary data can serve as a source for such details, ideally as part of a digitized end-to-end enrollment process.

The figure below maps out these recommendations across the phases of government programs:

A multifaceted approach must emerge to safeguard government program beneficiaries against fraud. Enhancing digital literacy, streamlining enrollment processes and ensuring effective communication can significantly reduce the risk of fraud and ensure that vulnerable individuals, such as Manju and Aftab, continue to receive the support they need without falling victim to deceit.

This article was first published in the FinDev Gateway on 29th October 2024.

Beyond the catch: How fish can fuel a healthier Indonesia

Posted on by Deepesh Singh

As Indonesia continues to build its economic growth based on the foundation of its rich natural resources, a critical opportunity lurks within its waters in the form of fish and other aquatic foods. Often called “blue foods,” fish and aquatic foods are a dietary staple for millions across the archipelago. Fish plays an essential role in meeting the nutritional needs of Indonesians. Between 2017 and 2022, the country’s per capita fish consumption has climbed steadily from 47.34 kilograms to 57.27 kilograms, as per December 2023 data from Statistik Kementerian Kelautan dan Perikanan. This rise signals the increasing role of fish in the Indonesian diet. Yet despite this growth, malnutrition, particularly among children, persists alongside widespread micronutrient deficiencies.

This paradox—high fish consumption alongside malnutrition—points to significant gaps in dietary intake and highlights the urgent need for policies that promote nutrition-focused blue food systems. Take East Nusa Tenggara as an example. The province faces the highest case of stunting in Indonesia at 37.9%, way above the national average of 21.5%, despite a per-capita fish consumption of 53.06 kg, only slightly below the national average.

To understand the paradox, we must dive into the heart of the fish supply chain, which comprises the country’s small-scale fishers. More than 10 million people are involved in small-scale fisheries in Indonesia, around 5 million of whom engage in fishing mainly to feed their households. For these communities, fish serves as a source of sustenance and income, which leads to trade-offs that can limit the nutritional benefits they derive from their daily catch.

Research from MSC Indonesia and Bappenas reveals that many fishers struggle to consume nutritious seafood themselves despite their vital role in the fish supply chain. While fish is a staple in their diets, fishers often sell high-quality fish to earn a living and consume lower-value fish at home. During lean seasons, this challenge intensifies and forces many to turn to less nutritious options, such as instant noodles. When fishing yields are low, fishers often buy cheaper, lower-quality fish from local markets. Price, rather than nutritional value, drives fish selection in these households. This behavior reflects broader economic hardships and limited nutritional literacy in low-income coastal communities.

Fishers also widely practice traditional preservation methods, such as salting and drying, to ensure food security during off-seasons. However, these methods can reduce the nutritional value of the fish. Consequently, many fisher households rely on simple meals of fish, rice, and sambal (chili paste) with minimal use of vegetables or nutrient-dense foods. Although fish remains a dietary mainstay, the unchanging preparation and preservation techniques limit their intake of essential fatty acids, vitamins, and other vital nutrients. For young children and new mothers, the lack of dietary diversity hampers ability to achieve optimal nutrition, particularly in the crucial first 1,000 days of life, and contributes to stunting and other malnutrition linked growth and development delays.

The lack of nutritional knowledge also affects dietary choices among pregnant and lactating women, who can benefit greatly from nutrient-rich seafood if they are empowered to make informed dietary choices. Limited knowledge, access or affordability of their specific dietary needs can leave vulnerable populations, including children, women, and the elderly, with nutritionally inadequate diets.

The current state of nutrition and dietary practices among fishers highlights a critical opportunity: Around 69% of Indonesia’s poor population lives in coastal areas, where many engage in fishing. Enhancing fishers’ access to nutritious blue foods could significantly benefit their health and well-being alongside that of the broader low-income coastal communities they represent.

Indonesia’s blue food economy has a unique opportunity to catalyze improved nutrition outcomes nationwide. Realizing this potential requires a holistic approach that enhances awareness, affordability, and accessibility and integrates blue foods into existing systems and practices.

First, the government and private sector should collaborate to improve the affordability and availability of nutrient-dense fish. Strategies, such as subsidies for farming high-value species, along with community-driven fisheries that prioritize local consumption can broaden access to these resources. In underserved areas, as demonstrated in India, initiatives to increase the availability of nutrient-rich fish can diversify diets and reduce the dependence on less nutritious alternatives.

One transformative approach lies in the incorporation of blue foods into national nutrition and social protection programs. Examples from other regions, such as the Philippines, show that integrating fish into social safety nets can yield significant health benefits. In Indonesia, integrating blue foods into social assistance initiatives, such as the Bantuan Pangan Non Tunai (BPNT) program, could help achieve this goal by providing essential foods to vulnerable families. The expansion of these programs in coastal areas would ensure that more nutritious seafood reaches households in need.

Likewise, promoting fish-based options for pregnant and breastfeeding women through the Program Keluarga Harapan (PKH) can help enhance the nutritional outcomes for vulnerable populations. Moreover, the anticipated launch of a national school meal program offers a valuable opportunity to incorporate fish-based meals in schools, especially in regions with high blue food production. This inclusion would enhance children’s nutrition and develop healthy eating habits early on.

Another crucial step is increasing nutrition literacy among fisher communities. Despite fish being a staple in their diet, many remain unaware of its specific health benefits, such as the role of omega-3 fatty acids, essential vitamins, and minerals in maintaining overall well-being. Community-based education programs delivered through local health clinics, schools, and fishing cooperatives can help these communities better understand the nutritional value of various fish species and the importance of nutrient-preserving preparation methods. Tailored information, education, and communication (IEC) materials, cooking demonstrations, and the training of community health workers can empower households to make healthier food choices. These initiatives can highlight the value of a balanced diet to help maximize the intake of essential macro and micronutrients.

Fostering dietary diversity through cultural and behavioral changes is equally important to complement education. Social and behavior change communication (SBCC) campaigns can encourage healthier cooking methods and promote the inclusion of locally available fruits and vegetables alongside fish. Moreover, Indonesia’s vibrant cultural festivals that celebrate fisheries—such as those featuring crabs or grouper—offer unique opportunities to engage communities. Nutrition experts can use these events to promote health literacy through recipe competitions, cooking demonstrations, and interactive sessions that underscore the importance of diverse and balanced diets.

The Indonesian government has already shown a strong commitment to advance blue foods and improve nutrition outcomes. Indonesia can unlock the full potential of its blue food economy if it combines education, economic support, and cultural engagement with strategic program integration. By doing so, the nation will be able to nourish its people and set a global example of how aquatic resources can drive sustainable and equitable health outcomes.

This article was first published in The Jakarta Post on 27th November 2024.

Beyond fish curries a celebration of Bihar’s traditional fish recipes

Posted on by Saumya Dixit

This fish recipe book, part of the JEEViKA Special Purpose Vehicle for Agriculture Transformation (JSPVAT) initiative, showcases traditional fish preparation methods across Bihar. Supported by the Bill & Melinda Gates Foundation, MSC, and WorldFish, it promotes the nutritional benefits of fish consumption, preserves cultural heritage, and empowers local communities through sustainable aquaculture. By encouraging healthy diets and fostering culinary skills, this initiative strengthens livelihoods and supports Bihar’s local economy.

Click here to download the Hindi version of the recipe book.

Impact of digital platforms on microenterprises: Bangladesh country findings

Posted on by Saumya Dixit

A study by MSC and Busara, supported by the Bill & Melinda Gates Foundation, examined how digital platforms impact microenterprises across four different geographies. In Bangladesh, platformed microenterprises experience higher income and profit. Sector, location, and gender influence platform usage and payment preferences, with a notable reliance on cash in rural areas and mobile money in urban settings. Women microentrepreneurs rely heavily on spouses for business decisions, which underscores the need for tailored financial inclusion strategies​. 

Read this country pullout document for detailed insights and recommendations to unlock the potential of these platforms for inclusive growth of microenterprises.

From Ration Shops to Nutrition Hubs: A Nutritional Revolution in the Making

Posted on by Deepesh Singh

Imagine walking into a local fair price shop (FPS) and finding not just rice and wheat but a vibrant array of nutrient-rich foods, from fresh vegetables to fortified grains and pulses. This would be a dream come true for someone like Lakshmi, a mother of three from rural India who relies on her local FPS to feed her family. Every month, she visits the nearby FPS to collect rice and wheat. Yet despite this access, Lakshmi struggles to provide her children with a balanced diet, because of the rising prices of vegetables, lentils, and milk.

For millions like Lakshmi, India’s Public Distribution System (PDS) has been a lifeline ensuring access to staple foods. While it has successfully addressed caloric needs, it falls short in providing a diverse and balanced diet. The National Institute of Nutrition’s “What India Eats” report shows that people’s reliance on cereals leaves significant gaps in dietary diversity, with insufficient intake of essential foods, such as legumes, milk, and vegetables. These deficiencies are a pressing public health concern. But what if FPSs can offer more?

A recently launched initiative by Union Minister Pralhad Venkatesh Joshi seeks to transform the role of FPSs to address this issue. It involves a pilot project to convert 60 FPSs into ‘Jan Poshan Kendras’ across Gujarat, Rajasthan, Telangana, and Uttar Pradesh. These nutrition hubs are set to provide a wider range of nutrient-dense foods at affordable prices while creating new income opportunities for FPS dealers. Here is how this transformation can succeed to nourish the families of millions of Indians like Lakshmi:

1) Identification of nutrient-dense commodities: The first step is to decide which healthy food should be sold in these hubs. These items must be prioritized based on their nutritional value and ease of inclusion. Priority should be given to non-perishable items with high nutritional value and ease of storage, such as pulses, fortified foods, and oil. As supply chains mature, perishable items, such as fresh vegetables and dairy, can be gradually introduced.

Nutritional Value and Ease of Inclusion in FPSs

2) Establishment of efficient supply chain and market linkages: A well-organized supply chain is vital to get nutritious food into these shops. This can be done through partnerships with FMCG aggregators, farmer producer organizations (FPOs), ministries, and cooperatives. Moreover, these supply chains must be integrated with market linkages to provide farmers with a reliable outlet for their produce and allow FPSs to access fresh and diverse food items at affordable prices.

A centralized digital platform that organizes ordering, invoicing, and analytics can make the process smoother. This platform will allow FPS dealers to place orders with different aggregators, track inventory, and monitor sales. FPS dealers must receive training to navigate this digital interface.

3) Diversification of products for profitability: Apart from nutritious food, FPS dealers can also sell other everyday items, such as cleaning supplies and personal care products. This will attract more customers, increase sales, and improve their income, making the nutrition hub a more financially viable model.

4) Community awareness and engagement: The success of nutrition hubs will depend on how well communities understand and embrace them. Awareness campaigns should be launched to inform families about the benefits of balanced nutrition and the availability of healthy food at their local FPSs. Frontline workers, such as Accredited Social Health Activists (ASHAs) and Anganwadi workers (AWWs), can be vital to educate the community.

Monitoring the effectiveness of these campaigns will also be crucial to ensure that they reach the intended audience and lead to meaningful behavior changes.

Through strong partnerships, community engagement, and efficient supply chains, we can turn these shops into nutrition hubs that fight hunger and promote health and well-being. For Lakshmi and millions like her, this could truly be a nutritional revolution in the making.

This article was first published in the Krishi Jagran website on 6th November 2024.

Formalizing businesses in Bangladesh: How women entrepreneurs see the trade licensing process

Posted on by Saumya Dixit

Amina wants to transform her home-based craft business into a thriving enterprise in Dhaka. She is talented and pours her heart into every piece of her intricate, handcrafted jewelry. However, she has failed to expand her business as she cannot access credit because she lacks a trade license.

The lack of trade licenses significantly hinders the formalization of Bangladesh’s cottage, micro, small, and medium enterprises (CMSMEs). Women in Bangladesh have a majority ownership of only 1.7% of formal firms in Bangladesh, a stark contrast to the global and regional averages of 14.5% and 9.6%, respectively. More than 90% of Bangladesh’s 7.8 million businesses are informal, primarily due to the absence of trade licenses. Informal operation restricts access to formal finance and business development services, which limits growth potential, especially for women entrepreneurs.

Although the regulator allows small-scale traders to open bank accounts without trade licenses, businesses cannot obtain credit from banks without a trade license. Their choices become limited to their informal network or the higher-priced MFI loans. The acquisition of trade licenses typically requires significant time, cost, and effort and involves several steps, which include the submission of the necessary documentation to the local city corporation or municipal authority. Moreover, the license must be renewed annually. Only since September 2023 has Dhaka South City Corporation started to issue five-year business licenses. The government expects to roll out a similar program countrywide soon.

We conducted a comprehensive study of CMSMEs through the Women Business Diaries project, supported by the Bill & Melinda Gates Foundation. This research identified several demand- and supply-side barriers that hinder women’s access to formal credit. Among these, the lack of a trade license was a significant obstacle for women entrepreneurs. Only 48% of entrepreneurs from our sample of 413 female and 76 male entrepreneurs had ever possessed a trade license. However, this proportion varies significantly between male and female entrepreneurs, as male entrepreneurs are more likely to have a trade license (p=0.000).

However, gender is not the only factor that affects a woman entrepreneur’s ability to obtain a trade license. Our research examined factors, such as business location, type of premises (home-based or separate), business scale, owner’s education level and age category, type of business, and engagement in activities, such as securing bank loans or conducting sales beyond the local market. We employed a statistical comparison of proportions with Bonferroni correction for this analysis.

Our analysis revealed that location, type of premises, and type of business were not statistically significant factors that affect women entrepreneurs’ possession of a trade license.

However, several other factors showed statistically significant differences in their association with the possession of a trade license, as listed below.

  1. Business owners’ education level: Graduate or postgraduate women entrepreneurs are more likely to have a trade license than those who lack formal education (p=0.004) or have attained primary-level (p=0.004) or secondary-level education (p=0.044). Moreover, female business owners who lack formal education are significantly less aware of the trade application process than those who have received some education.
  2. Business owner’s age: Younger women entrepreneurs are less likely to have a trade license than those in the middle age (p=0.020) or older age categories (p=0.000). This could be because they realize the benefits of a trade license as they gain business experience. Moreover, a trade license becomes essential when owners want to scale their business and avail of credit and other formal support.
  3. Engagement in sales outside the local market: Women entrepreneurs who engage in sales outside their local market are more likely to have a trade license than those who only cater to their local market (p=0.016).
  4. The scale of business: Women entrepreneurs with average monthly revenue of more than BDT 100,000 (USD 837) are more likely to have a trade license than those with average monthly revenues that range from BDT 25,000 (USD 209) or below (p=0.000), 25,001 to 50,000 (USD 209 to USD 418) (p=0.000), and BDT 50,001 to 100,000 (USD 418 to USD 837) (p=0.001). This can, in part, be because women entrepreneurs with smaller businesses that generate monthly average revenue up to BDT 25,000 (USD 209) were more likely to report being unaware of the requirement for a trade license.
  5. Location of business: Similarly, female business owners in rural areas are more likely to be unaware of the trade license requirements than those in urban areas (p=0.009).

In our sample, 82% of the 43% of women entrepreneurs who have obtained a trade license currently have active or renewed licenses, and 86% have licenses registered in their names. Among the 51% who never applied, 59% expressed uncertainty about the need for a trade license, while 27% cited the burdensome paperwork as a deterrent. The following figure outlines other reasons for non-application:

Additionally, we found several ecosystem-level complexities. The annual renewal process often requires multiple visits to licensing offices, which can be difficult for women who lack their family’s support or must travel to urban areas to apply for the license. Further, the acquisition of a trade license often involves registration fees, renewal fees, and other administrative costs. It may often also involve bribes to intermediaries. These costs present a significant barrier. Such challenges highlight the need for more accessible and streamlined licensing procedures that accommodate the unique circumstances of women entrepreneurs in Bangladesh. The section below outlines four recommendations for stakeholders to ease the process of issuing trade licenses for women entrepreneurs.

  1. Simplified processes to issue trade licenses: Countries, such as Singapore, New Zealand, the UK, and Australia, issue digital trade licenses in one to three steps. On the other hand, the acquisition of a trade license in Bangladesh requires seven to eight steps. Bangladesh may also consider the use of its national identity cards to issue trade licenses as several other countries currently do. The reduction of the steps to get a trade license will enable more businesses to move toward formalization.
  2. Extended channels: The use of existing channels, such as NGOs, mobile financial service (MFS) agents, and banking agents, to support women in the trade license application process could improve access for women entrepreneurs. Additionally, the establishment  of centers in rural areas could help women in underserved regions obtain and renew their licenses without traveling long distances to urban centers. This combined strategy will guide them throughout the application process and significantly enhance convenience and accessibility for women in business.
  3. Subsidized application and renewal fees: Fees for trade licenses in Bangladesh range from BDT 100 to BDT 40,000 (USD 0.84 to USD 335). Relevant incentives, for example, discounted rates for timely renewals, could reduce financial barriers for women entrepreneurs and encourage more businesses to formalize their operations. Additionally, nudges, such as free renewals before the license expiry, will encourage more small businesses to opt for a trade license. Kenya has adopted a similar approach to push the formalization of its small businesses.
  4. Awareness campaigns: Educational and outreach efforts can effectively inform women entrepreneurs about the benefits of obtaining a trade license, such as access to financial services, increased credibility, and legal protection. These efforts can feature success stories to demonstrate the advantages of formalized businesses, which would inspire others to follow suit. Additionally, the use of social media to guide women through the application process can create a supportive community for aspiring entrepreneurs.This approach promotes formalization and keeps women updated on developments, such as the government’s initiative to extend trade license validity.

This blog underscores that the trade license policy and approach must be reformed to promote women’s entrepreneurship in Bangladesh. The government can address the existing barriers and implement measures to facilitate greater participation of women in the formal economy. This would empower women and contribute to the broader economic growth and the successful graduation of Bangladesh from the Least Developed Country (LDC) status.