The Last Cheque: Why India Raced Ahead While America Crawled
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CAG audits in India and GAO reports in the U.S. expose risks of ghost beneficiaries, improper payments, and weak systemic controls, raising doubts on whether digitization alone can ensure financial integrity.
By P SESH KUMAR
NEW DELHI, September 16, 2025 — By September 30, 2025, the United States will finally phase out paper checks for most federal payments, thanks to an executive order signed by President Trump. While this move is framed as modernization, it exposes a stark anomaly: the world’s largest economy, with Silicon Valley in its backyard, is arriving late to a race that India finished years ago.
India’s income tax refunds, Direct Benefit Transfers, and welfare payments have become almost entirely electronic, with refund times (with rare exceptions) collapsing from 93 days to just 17 days on average.
In contrast, the U.S. still mailed millions of checks even in 2025. Drawing on quantitative contrasts, audit insights from India’s CAG and the U.S. GAO, and the symbolism of Trump’s deadline, this note explores why America lagged, how India pulled ahead, and what the numbers reveal about efficiency, fraud, and accountability.
When Treasury Secretary Scott Bessent hailed the September 30, 2025 cutoff for paper checks as a “long-standing bipartisan goal” finally realized, the applause in Washington masked an uncomfortable truth: this was less about leading than about catching up. The U.S., despite decades of technological prowess, still clung to paper instruments while India, a country once mocked for red tape, had already made electronic payments the norm.
The data tell the story bluntly. In India, income tax refunds have ballooned from ₹ 83,008 crore in 2013-14 to ₹ 4,76,743 crore in 2024-25—a 474% increase in refund outgo. Over the same period, gross direct tax collections rose by only 274%. The real magic, however, lies in speed: refund issuance time (with rare exceptions, Government would like to say) shrank from 93 days in 2013 to an average of 17 days in 2024. Some simple e-verified returns are now processed within hours.
Filing volumes doubled too, from about 3.8 crore returns in 2013 to nearly 8.9 crore in 2024. India’s DBT revolution added further heft: welfare and subsidy payouts worth nearly ₹ 6.83 lakh crore in 2024-25 were transferred directly to beneficiary bank accounts, with Government estimated savings of about ₹ 3.48 lakh crore by eliminating ghost or duplicate entries.
Across the Atlantic, the U.S. IRS is no laggard on numbers, but the contrast is telling. By mid-March 2025, the IRS had issued 49.8 million refunds, of which 48.3 million (97%) were via direct deposit, leaving 1.5 million refunds still on paper checks. That residual 3% is understood to translate to about $2-3 billion in mailed checks.
The Social Security Administration tells a similar story: of its more than 68 million beneficiaries, about 512,690 appear to (≈ 0.8%) still receive paper checks. For the world’s richest nation, even these residuals look like relics. That it took a presidential order in 2025 to eliminate them underscores the slack.
The anomaly grows starker once audit insights are considered. India’s Comptroller and Auditor General (CAG) has praised the efficiency gains of electronic payments but has also exposed some odd misuses: fake beneficiaries, weak IT controls in some states like Jharkhand and Assam, and poor recovery of ineligible disbursements.
Yet these findings, damning or not, show that oversight is keeping pace with the digital push, constantly prodding governments to fix leaks. The U.S. Government Accountability Office (GAO), meanwhile, has long reported the enormity of “improper payments.”
In FY 2024 alone, GAO estimated $162 billion in federal improper payments—overpayments, payments to ineligible claimants, or miscalculations. Fraud linked to electronic filing and identity theft remains a persistent risk, as do inefficiencies in IRS modernization programs.
The Missed IT Audit Opportunity
CAG prides itself as a pioneer and leader in international arena in the field of IT led audits. What is striking in hindsight is how the CAG’s audits of Direct Benefit Transfer schemes and income tax refund processes often stopped at the state-level implementation lens—counting ghost beneficiaries in Jharkhand, highlighting pension disbursal delays in Assam, or exposing mis-targeting in Odisha—without turning its spotlight on the backbone itself: the central IT architecture that powers DBT and the CPC refund engine.
An auditor of last resort cannot afford to leave the “plumbing” outside its gaze. These national systems are not just conduits; they are the very arteries of India’s fiscal state, handling billions of transactions. Yet systemic control risks—data integrity, cyber resilience, algorithmic verification, and fraud-flagging capacities—were not probed with the same intensity. By confining its lens largely to odd state roll-outs, the CAG risked leaving critical blind spots: whether Aadhaar seeding is robust, whether refund algorithms could be gamed, whether data governance protocols are adequate.
In effect, the institution’s audits may have been “local” in scope when they ought to have been “architectural” in ambition, and that gap is glaring given the magnitude of sums flowing through DBT and tax refunds at the Centre.
The Counter-View
One must also concede, however, that there could have been structural and jurisdictional reasons why the CAG’s audits leaned toward state-level implementation rather than the central IT architecture. Or the plain reluctance to probe the Central Government.
The DBT platform sits at the intersection of multiple ministries, the Aadhaar ecosystem, the National Payments Corporation of India, and the Public Financial Management System. Each of these entities is shielded by layers of statutory and contractual confidentiality, which makes full-scale IT audit access thorny. Similarly, the CPC at Bengaluru operates with proprietary software, sensitive taxpayer data, and cybersecurity protocols that the Income Tax Department might resist (it is certainly not an entity that welcomes such probing audits) exposing wholesale to the auditor.
In such a context, the CAG may have chosen a pragmatic route—scrutinizing outcomes in states where leakages and irregularities were visible—rather than waging a protracted battle for central access. There is also the perennial political risk: challenging the heart of flagship central systems like Aadhaar or CPC refunds could have been seen as an attack on reform narratives, something no constitutional office takes lightly.
In that sense, what looks like a gap may equally be read as a calculated compromise born of realpolitik and institutional survival. Either way, what suffers is good governance- which remains more a talking point.
So why is America behind? The reasons are systemic. Federalism produces fragmentation: each agency and program had its own systems and exceptions, making a blanket mandate politically difficult. Cultural comfort with cheques, particularly among seniors, slowed the push. The U.S. also faces its persistent “unbanked” problem—millions of Americans without bank accounts (hard to believe- isn’t it?). Legal mandates requiring exceptions reinforced the inertia.
India, on the other hand, rolled out Aadhaar, Jan Dhan bank accounts, PFMS, and DBT as part of a national mission, treating electronic payments as not just modernization but nation-building. The incentives were sharper: fraud, leakages, and corruption in paper-based systems were politically intolerable, and direct transfers were both a reform and a political weapon.
The numbers cut through rhetoric. India issues refunds faster, on a larger scale, almost entirely electronically. The U.S. issues refunds reliably, but until now tolerated a stubborn paper rump. India’s CAG highlights misuse but celebrates massive gains; America’s GAO highlights improper payments that remain staggeringly high even with electronic systems. Both countries prove that digitization does not eliminate fraud or error—but India demonstrates that digitization can be politically and operationally transformative, while the U.S. has shown that digitization without deadlines leaves systems stuck in the past.
The September 30, 2025 cutoff for U.S. paper checks is, thus, more than a bureaucratic housekeeping measure—it is a confession that America lagged far behind where it should have been. The “last cheque” is an anomaly in a country that invented PayPal, Venmo, and Apple Pay, yet tolerated paper government payments until now. India, despite weaker infrastructure and far greater inclusion challenges, surged ahead with DBT and rapid electronic refunds. Its success is visible in the data: refunds up nearly five-fold in value, but turnaround times cut by four-fifths, and subsidies reaching bank accounts without leakages.
Auditors in both countries remind us that speed is not the same as integrity. CAG audits show the continuing risks of ghost beneficiaries and poor recovery, and more critically, their limited probing of the central IT architecture leaves systemic control questions unanswered. Yet one must also recognize the jurisdictional and political constraints (questionable, though) that may have dictated this diluted audit focus. GAO audits in the U.S. warn that improper payments remain colossal despite digitization. But India’s example shows what political will and unified architecture can achieve. The U.S. now has the mandate; whether it can back it with oversight, inclusivity, and fraud control will determine if September 2025 is remembered as the death of paper checks—or merely as the beginning of yet another overdue catch-up.
(This is an opinion piece, and views expressed are those of the author only)
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