The Limits of Government Outsourcing: Property Tax Re-Assessments in India

This paper evaluates the effectiveness of public outsourcing in the context of local property tax re-assessment in Chennai, India. Using experimental and administrative data, the authors find that government inspectors achieve higher revenue gains and greater assessment accuracy compared to private contractors. Barriers to effective private contracting — including weak enforcement mechanisms and information asymmetries — help explain why outsourcing fails to improve performance. The findings highlight inherent limits of outsourcing for complex public tasks requiring local knowledge and enforcement authority.