Tracing Public Money on the Blockchain: An Analytical Study of Smart-Contract-Based Welfare Fund Disbursement for Reducing Leakage, Fraud, and Administrative Corruption

Abstract

Public sector welfare programmes are formulated for transferring public money to intended beneficiaries. But the conventional disbursement machinery suffers from wide leakage, duplicate claims, delayed payments, weak audit trails and discretion-based administrative handling. Disaggregated databases, paper records, multi-layer approval systems, etc., worsen matters relating to welfare delivery. A smart-contract-based blockchain disbursement can improve transparency and accountability in welfare fund delivery. A combination analysis design is used and a simulated transaction level data set containing 200 welfare payments (100 traditional disbursement transactions and 100 smart contract-based blockchain transactions) support the analysis. The numerical data used for the statistical modelling in this paper is simulated for academic analysis and thus needs validation with actual government welfare disbursement data before policy implementation. The mentioned tests in the analysis include techniques pertaining to descriptive statistics, mean comparison, independent sample t-test, chi-square test, correlation analysis and simple regression. The results of the simulation suggest lower leakage, shorter payment delay, stronger completeness of the audit trails and reduced fraud flags in the Blockchain smart-contract model. According to the regression results, the higher the score for transaction transparency, the lower the leakage percentage. The study concludes that, as a permissioned, privacy-protecting and institutionally supervised system, blockchain can strengthen public finance governance. Nonetheless, blockchain cannot replace legal responsibility, social audit, grievance redressal and inclusive administrative design.