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Introduction

Context, intervention and evaluation


Results

Information Technology, Transparency and


Corruption in Public Programs: Evidence from a
Large Workfare Program in Bihar, India

Esther Duflo

with Abhijit Banerjee, Clement Imbert, Santosh Matthew and Rohini Pande

ISI Seminar, September 2014


Introduction
Context, intervention and evaluation Introduction
Results

Motivation
I Public Programs in developing countries are often not
implemented as they should
I Corruption is a part of the problem (though not the only one)
I In particular, leakage of funds is frequent.
I MNREGA is a case in point:
I Comparison of survey estimates (NSS) to MNREGA official
data suggest leakage of about 40%-60% in 2007-2998 down to
20% in 2011 (Imbert and Papp). Similar effort for Bihar shows
leakage of about 20% (Dutta, Murgai, et al, 2012)
I Niehaus and Sukthankar (2013) search for 1499 individuals in
the state of Orissa, who were reported as MGNREGS workers
by nrega.nic.in. They find only 821 both exist and report
having worked and of these 821, most received less than the
reported amount payments.
Introduction
Context, intervention and evaluation Introduction
Results

Motivation

I This is not for lack of trying to reduce corruption


I Regular Audits (and punishments)
I Social Audits
I Entry in a publicly available MIS (NIC) of every one who
worked and every expenditure done allows (in principle) for
scrutiny.
I Since 2008, all wages are paid through a postal or bank
account.
Introduction
Context, intervention and evaluation Introduction
Results

Motivation

I But there are gaps in the system


I Entry is often delayed by months.
I Only partial entry(60%) is really required.
I In the end, day to day accountability is still mainly provided by
the standard command and control channel: panchayat
officials are monitored by block officials who are monitored by
district officials. Paper records still play an important role.
Introduction
Context, intervention and evaluation Introduction
Results

Information Technology and Corruption

I Can real time data processing made possible by better


information technology reduce corruption?
I Ties in to the hope of ”e-governance”.
I In the context of the same program, in Andhra Pradesh,
Mularidharan et al. (2014) that biometric smart cards to
handle payments to beneficiaries “delivered a faster, more
predictable, and less corrupt payments process without
adversely affecting program access”.
I Our intervention is complementary, and upstream from that
one: we look at the process by which money goes from the
State to the Panchayat (before it reaches beneficiaries)
Introduction
Context, intervention and evaluation Introduction
Results

Quick description of the intervention and experiment


I Status quo: to obtain money the Panchayat must send a
request to the Block, which sends a request to the district,
which sends a request to the State, which delivers the money
to the Panchayat’s account
I Under the new system (CPSMS II), the Panchayat directly
enters the information on who they have hired and uploads it
to the server, and that immediately generate a transfer to the
Panchayat account and a check is cut to the postal office that
administers the beneficiaries account, with a list of names
I The new system only apply to payment for wages.
I A “full scale” experiment: The new system was rolled out by
the Bihar Government in 12 districts (covering 22 million rural
people), and we randomly selected one third of the blocks in
each of these districts to receive the new system.
Introduction
Context, intervention and evaluation Introduction
Results

What did the intervention do and what should we expect?


I The intervention
1. Cut out the district officials entirely from the gravy train (not
the block officials, because Panchayat workers still depend on
them to enter the data)
2. Made cheating more difficult by requiring documentation of a
worker at the time of the fund request
I What to expect on leakage?
1. Ambiguous effect on theft at the local level (income and
substitution effect of a lower tax on cheating effort)
2. Should unambiguously reduce cheating
I Effect on actual performance (provision of work) unclear: fund
flow was supposed to be more reliable, but entry required
more effort on the part of the Panchayat officials. Reducing
leakage may reduce incentives to exert effort (although most
of the leakage was probably essentially “free” before).
Introduction
Context, intervention and evaluation Introduction
Results

Overview of results

I 19-28% of decline in reported expenditures, corresponding to


an average of R 3.75 million per block over the duration of
the intervention.
I No change in real outcomes: no decline in actual work days
reported by households or in asset built.
I It must indicate a large decline in leakage.
I Consistently, a decline in liquid assets of MNREGA officials
after the program : 26%, or Rs 2.4 million on average per
block: order of magnitude sounds very plausible.
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Fund Flow in Control


Status  Quo
State  Pool  in  Central  Bank  of  India    
Fund  Request  

Fund  Transfer  
CPSMS    
District   Access   4
2

Block  
1 5
Panchayat  
Panchayat   Savings  Account  
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Fund Flow in Treatment (Labor Payments only)


Interven'on
State  Pool  in  Central  Bank  of  India      
Fund  Request  

Fund  Transfer  
2

1
Panchayat  
CPSMS     Savings  
Panchayat   Access   Account  
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Parsing the intervention

I 1. The intervention makes it more difficult/dangerous to


cheat
I In the regular system, entry into nrega.inc happens only several
months later, and they are only required to account for 60% of
the labor days they bill for: it is easy to embezzle at least 40%.
Some other constraints (e.g. assets must be created).
I In the reformed system, entry must correspond to a name/days
worked: it becomes immediately possible to audit.
I Audits are few and far between but they do carry large
penalties (prison).
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Parsing the intervention

I 2. The intervention also changes who can take a cut:


I In the regular system, cheating is done by the lower level. The
block level and district levels are in a position to collect a tax.
I In the new system, the district level is entirely cut out. The
block level remains critical because all the infrastructure to
enter data (plus the capacity to do it) is at the block: their
remain gatekeepers.
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

What to expect?
I Cutting the district people out reduces overall tax burden on
graft: there could be an income effect (less graft) and a
substitution effect (more graft)
I Immediate availability of data should unambiguously reduce
graft (it remains possible to cheat but colluding with villagers
become key).
I Who will be hurt the most ? It depends on bargaining power
of the block vs local people.
I Will MNREGA work availability increase or decrease? No clear
prediction.
I No uncertainty on the availability of funds (in principle).
I Technical challenges with the data entry: more work
I More effort to extract bribes: has an income and a substitution
effect: ambiguous.
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Sample

12 Districts
69T 126C Blocks
1002T 2029C Panchayat
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Data sources

I CPSMS: financial transactions from all Panchayat savings


account.
I Daily debit from Panchayat Account: 1st Sept 2011 - 1st July
2013

I MIS: monitoring system of the Ministry of Rural Development.


I Expenditures for the financial year: 1st April 2012 - 31st
March 2013
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Data sources II

I Household survey: 9500 households randomly sampled in 390


Panchayat in 195 blocks, May – July 2013.
I Household members who worked for MGNREGS were asked to
report when and how long they had worked in MGNREGS
since July 2012, when and how much they were paid
I Also include a consumption survey.
I Survey of 4165 MGNREGS asset randomly sampled from
nrega.nic.in
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Data sources III

I Mukhiyas interview in each surveyed village.


I MGNREGS employment is nrega.nic.in: reported work spells
and payments for all MGNREGS workers, matched with
survey households using household member age and name.
On average 6.5 matches for one households: not a reliable
measure of level of leakage but the difference between
treatment and control is still informative.
I Asset declaration of all of MNREGA employees (not
politicians). Two waves: one during our intervention, and one
one year after the end. We use only liquid assets (money and
jewelry).
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Timeline

I July 2012: Preparation (prepare infrastructure)


I Sept 1st 2012: Launch
I Sept 18th: State Pool runs dry.
I Dec 11th: State Pool replenished.
I Dec 15th: Strike of Panchayat Personnel
I April 1st 2013: Intervention is rolled back.
I May 15th - July 15th 2013: Endline survey
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Timeline

I July 2012: Preparation (prepare infrastructure)


I Sept 1st 2012: Launch
I Sept 18th: State Pool runs dry.
I Dec 11th: State Pool replenished.
I Dec 15th: Strike of Panchayat Personnel
I April 1st 2013: Intervention is rolled back.
I May 15th - July 15th 2013: Endline survey
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Timeline

I July 2012: Preparation (prepare infrastructure)


I Sept 1st 2012: Launch
I Sept 18th: State Pool runs dry.
I Dec 11th: State Pool replenished.
I Dec 15th: Strike of Panchayat Personnel
I April 1st 2013: Intervention is rolled back.
I May 15th - July 15th 2013: Endline survey
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Infrastructures available in the Block

Treatment Control
July ’12 Sept ’12 Jan ’13 Apr ’13 Apr ’13
Computer 2.02 2.79 2.48 2.12 1.75
Internet 0.82 0.96 0.98 0.9 0.86
Generator 0.55 0.88 0.96 0.75 0.67
DEO 1.71 2.53 2.2 1.81 1.38
Scanner 0.8 NA 0.81 0.88 0.71
Printer 0.84 NA 0.77 0.91 0.83
Sample 49 68 66 69 113
Source: Monitor Reports
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Timeline

I July 2012: Preparation (prepare infrastructure)


I Sept 1st 2012: Launch
I Sept 18th: State Pool runs dry.
I Dec 11th: State Pool replenished.
I Dec 15th: Strike of Panchayat Personnel
I April 1st 2013: Intervention is rolled back.
I May 15th - July 15th 2013: Endline survey
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Timeline

I July 2012: Preparation (prepare infrastructure)


I Sept 1st 2012: Launch
I Sept 18th: State Pool runs dry.
I Dec 11th: State Pool replenished.
I Dec 15th: Strike of Panchayat Personnel
I April 1st 2013: Intervention is rolled back.
I May 15th - July 15th 2013: Endline survey
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Trends in Spending (CPSMS)


Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Timeline

I July 2012: Preparation (prepare infrastructure)


I Sept 1st 2012: Launch
I Sept 18th: State Pool runs dry.
I Dec 11th: State Pool replenished.
I Dec 15th: Strike of Panchayat Personnel
I April 1st 2013: Intervention is rolled back.
I May 15th - July 15th 2013: Endline survey
Introduction The intervention
Context, intervention and evaluation Evaluation
Results Challenging context

Timeline

I July 2012: Preparation (prepare infrastructure)


I Sept 1st 2012: Launch
I Sept 18th: State Pool runs dry.
I Dec 11th: State Pool replenished.
I Dec 15th: Strike of Panchayat Personnel
I April 1st 2013: Intervention is rolled back.
I May 15th - July 15th 2013: Endline survey
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Impact (CPSMSdata)
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Treatment effect on spending (CPSMS)


(1) (2)
T Group*T Period -1,048** -1,046**
(446.6) (447.2)
Treatment Group -45.17 -68.30
(572.1) (418.1)
Treatment Period -2,183*** -2,183***
(283.9) (284.2)
Observations 5,883 5,883
District FE No Yes
Mean in Control during T 4333 4333
Effect as % of Mean -24.20 -24.14
Daily Debit from CPSMS Credit Debit Data
S.e. are clustered at the block level
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Treatment effect on spending (MIS)


Labor Material Total
Treatment -2.228*** -1.103** -3.335***
(0.758) (0.522) (1.102)
Observations 2,957 2,957 2,957
District FE Yes Yes Yes
Mean in Control during T 12.93 7.231 20.25
Effect as % of Mean -17.23 -15.25 -16.46
Annual Expenditures (Apr ’12 to Mar ’13) from MIS data
S.e. are clustered at the block level

Estimated effect in CPSMS=-1114*212days=-0.24million


Estimated effect in MIS is -0.33 millions (over a longer time
period).
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Participation

Since July 2012 During Intervention


1 2 3 4
Treatment -0.0006 -0.0015 0.0030 0.0029
(0.0086) (0.0089) (0.0059) (0.0062)
Observations 10,036 9,989 10,036 9,989
District FE Yes Yes Yes Yes
HH Controls No Yes No Yes
Mean in Control 0.0936 0.0936 0.0482 0.0482
Effect as % of Mean -0.623 -1.626 6.293 6.071
Source: Household survey (May-July 2013)
Standard errors are clustered at the block level
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Weeks worked
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Weeks Worked

Work Spell ended: Before Sep-Dec Jan-Mar After


Treatment -0.0110 0.0108 0.0217 0.00253
(0.0226) (0.0315) (0.0329) (0.0333)
Observations 9,966 9,966 9,966 9,966
District FE Yes Yes Yes Yes
HH Controls Yes Yes Yes Yes
Mean in Control 0.231 0.151 0.172 1.825
Effect as % of Mean -71.77 7.149 12.56 2.830
Source: Household survey (May-July 2013)
Standard errors are clustered at the block level
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Days Worked

Work Spell ended: Before Sep-Dec Jan-Mar After


Treatment -0.166*** 0.0347 0.128 0.0516
(0.0505) (0.132) (0.169) (0.357)
Observations 9,966 9,966 9,966 9,966
District FE Yes Yes Yes Yes
HH Controls Yes Yes Yes Yes
Mean in Control 0.231 0.499 0.693 1.825
Effect as % of Mean -71.77 6.959 18.48 2.830
Source: Household survey (May-July 2013)
Standard errors are clustered at the block level
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Payments received

Work Spell ended: Before Sep-Dec Jan-Mar After


Treatment -19.15*** -6.702 1.524 -29.78
(6.082) (13.43) (15.46) (27.27)
Observations 9,966 9,966 9,966 9,966
District FE Yes Yes Yes Yes
HH Controls Yes Yes Yes Yes
Mean in Control 24.33 45.54 57.88 113.5
Effect as % of Mean -78.71 -14.72 2.633 -26.24
Source: Household survey (May-July 2013)
Standard errors are clustered at the block level
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

NREGA projects built

!Number! Number! Fraction!


Registered! Completed! Found!by!
(MIS) (MIS) surveyor
(1) (2) (3)
Treatment 0.0494 0.372 0.0176
(0.263) (0.342) (0.0176)
Observations 390 390 4,165
District!FE Yes Yes Yes
Mean!in!Control 13.82 2.126 0.855
Effect!as!%!of!Mean!in!C 0.357 17.48 2.057
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Summary so far

I Drop in Expenditure (about 25%)


I No drop in number of days worked according to households
I No decline asset reported to be constructed, and found in the
field.
I Where is the missing missing money? Let’s look at the
officials.
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Durable goods of mukhyas


Table 14: Treatment effect on Mukhiya asset holding

Assets%owned%by%the%Mukhiya%
TV% Two%wheeler% CD/DVD%player% Gas%stove% Bicycle%
% (1)% (2)% (3)% (4)% (5)% (6)% (7)% (8)% (9)% (10)%
%
Treatment% 0.0339% 0.0329% L0.0173% L0.0549% L0.0767% L0.0976% L0.0546% L0.0584% 0.109% 0.0966%
%% (0.0695)% (0.0696)% (0.0953)% (0.0909)% (0.0677)% (0.0693)% (0.0809)% (0.0803)% (0.0949)% (0.0945)%
Observations% 354% 354% 354% 354% 354% 354% 354% 354% 354% 354%
District%FE% Yes% Yes% Yes% Yes% Yes% Yes% Yes% Yes% Yes% Yes%
HH%Controls% No% Yes% No% Yes% No% Yes% No% Yes% No% Yes%
ControlMean% 0.648% 0.648% 1.009% 1.009% 0.455% 0.455% 0.725% 0.725% 0.721% 0.721%
Effect%as%%% 4.763% 4.549% L2.723% L6.193% L21.66% L26.05% L9.103% L9.920% 13.22% 10.99%
Chair/Bed% Mobile%Phone% Four%Wheeler% Fridge% Asset index
% (11)% (12)% (13)% (14)% (15)% (16)% (17)% (18)% (19)
Treatment% 0.404% 0.122% 0.0126% L0.0189% L0.0510% L0.0242% L0.0465% L0.0431% !.0347'
%% (0.951)% (0.952)% (0.517)% (0.539)% (0.169)% (0.165)% (0.0488)% (0.0489)% (.0567)'
Observations% 354% 354% 354% 354% 354% 354% 354% 354% 354'
District%FE% Yes% Yes% Yes% Yes% Yes% Yes% Yes% Yes% Yes'
Controls% No% Yes% No% Yes% No% Yes% No% Yes% Yes
ControlMean% 10.49% 10.49% 3.163% 3.163% 0.730% 0.730% 0.262% 0.262% 0
Effect%as%%% 2.654% L0.682% L0.784% L2.574% L6.781% L4.371% L19.86% L18.38% %
%
Note:%The%unit%of%observation%is%a%Panchayat.%The%dependent%variable%is%the%number%of%assets%owned%by%the%
Mukhiya%household.%The%data%was%collected%by%a%representative%survey%of%350%Mukhiya%from%12%sample%districts%
households%in%MayLJuly%2013.%Treatment%is%a%dummy%which%is%equal%to%one%for%the%blocks%selected%for%the%
intervention.%%
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Cattles of Mukhyas

Table 15: Treatment effect on Mukhiya cattle holding

Assets%owned%by%the%Mukhiya%
Cows% Buffaloes% Goats% Chickens% Cattle&Index&
% (1)% (2)% (3)% (4)% (5)% (6)% (7)% (8)% (9)&
%
Treatment% E0.0891% E0.105% E0.0117% 0.00803% E0.224**% E0.199**% E0.0937*% E0.0867*% ..0946*&
%% (0.218)% (0.215)% (0.113)% (0.114)% (0.0976)% (0.0930)% (0.0557)% (0.0520)% (.0519)&
Observations% 354% 354% 354% 354% 354% 354% 354% 354% 354&
District%FE% Yes% Yes% Yes% Yes% Yes% Yes% Yes% Yes% Yes&
Controls% No% Yes% No% Yes% No% Yes% No% Yes% Yes&
ControlMean% 1.515% 1.515% 0.438% 0.438% 0.279% 0.279% 0.129% 0.129% 0%
Effect%as%%% E8.613% E10.50% E3.379% 0.905% E78.50% E73.55% E71.18% E68.77% %
Note:%The%unit%of%observation%is%a%Panchayat.%The%dependent%variable%is%the%number%of%animals%owned%by%the%
Mukhiya%household.%The%data%was%collected%by%a%representative%survey%of%350%Mukhiya%from%12%sample%districts%
households%in%MayEJuly%2013.%Treatment%is%a%dummy%which%is%equal%to%one%for%the%blocks%selected%for%the%
intervention.%
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Liquid Assets of NREGA functionaries [partial data]

Log total of assets declared by MGNREGS functionaries


(1) (2) (3) (4)

During-*-Treatment-Group 70.102 70.109 70.108 70.114


(0.184) (0.185) (0.202) (0.203)
After-*-Treatment-Group 70.263** 70.253** 70.334** 70.322**
(0.125) (0.126) (0.131) (0.132)
During-*-Block-Employee 0.668*** 0.650***
(0.117) (0.116)
After-*-Block-Employee 0.380** 0.362**
(0.157) (0.156)
During-*-Treatment-*-Block-Employee 0.000389 0.00467
(0.205) (0.205)
After-*-Treatment-*-Block-Employee 0.373* 0.364*
During-*-Low-Implementation (0.220) (0.217)
Observations 2,746 2,746 2,746 2,746
District-FE Yes Yes Yes Yes
Controls No Yes No Yes
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Decline in Assets is consistent with the indirect evidence of


reduction in Leakage

I Overall decline in expenditures (average by block): 3.75-5


million
I Overall decline asset one year after from Panchayat
functionaries (average by block): 2.4 million
I The order of magnitude is right: the difference may be funds
lost by the district, non-money asset, and increased
consumption.
I The Block level functionaries did not suffer at all, which is
surprising.
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Some increased delays in payments

Work Spell ended: Before Sep-Dec Jan-Mar After


Treatment -18.06 35.03** 15.84 -2.467
(24.03) (17.47) (9.770) (5.630)
Observations 123 170 225 381
District FE Yes Yes Yes Yes
HH Controls Yes Yes Yes Yes
Mean in Control 73.44 72.80 49.95 38.41
Effect as % of Mean -24.60 48.12 31.71 -6.423
Source: Household survey (May-July 2013)
Standard errors are clustered at the block level
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Confirmed by the Mukhiya

CPSMS creates delays Spontaneously When Prompted


Treatment 0.120*** 0.106**
(0.0429) (0.0425)
Observations 354 354
District FE Yes Yes
Mean in Control 0.119 0.144
Effect as % of Mean 101.4 73.44
Source: Mukhiya Survey
S.e. clustered at the block level
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

No change in Consumption

Table 13: Treatment effect on household log Monthly consumption

Log$Monthly$Consumption$
All$ Frequent$ Recurrent$ Rare$
$ (1)$ (2)$ (3)$ (4)$
$
Treatment$ @0.00367$ @0.00796$ @0.0282$ 0.00284$
$$ (0.0215)$ (0.0170)$ (0.0268)$ (0.0393)$
Observations$ 9,041$ 9,040$ 9,026$ 9,024$
District$FE$ Yes$ Yes$ Yes$ Yes$
HH$Controls$ Yes$ Yes$ Yes$ Yes$
Expenditures
Introduction Employment
Context, intervention and evaluation Payments
Results Other Evidence of reduction in Leakage
Did households pay part of the costs?

Conclusion and epilogue

I The new CPSMS led to a reduction in expenditure without


change in the level of transfers provided :less leakage
I This was done on a very large scale, in difficult circumstances
I However... this was shut down
I The district officials hated the system and anecdotes have it
that it is their reluctance that ultimately convinced the state
bureaucracy to pull back.

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