How to Target LPG Subsidies in India: Step 2. Evaluating policy options in Jharkhand

Based on a survey of over 900 households in Jharkhand, the report finds that LPG subsidies are poorly targeted, with the poorest 40% of households receiving less than 30% of government support in 2018/19. The analysis indicates that poor households may receive two times less in subsidies than better-off consumers due to low consumption of subsidized cylinders among the poor and high consumption among the wealthy. While LPG subsidies per cylinder were effectively removed in May 2020, the report warns that the COVID-19 crisis has increased the need for affordable clean cooking support. The authors conclude there is no 'magic bullet' for improving distribution and suggest that policy-makers consider volumetric targeting to limit expenditure until the causes of low consumption among poor households are addressed.

• LPG subsidies in Jharkhand are poorly targeted, with the poorest 40% of rural and urban households receiving less than 30% of government support during 2018/19, a period when LPG subsidies represented nearly 28% of India's total Central Government energy subsidies.
• Poor households in India may receive half as much in LPG support as wealthier consumers if current policy designs remain unchanged.
• The primary obstacle to better subsidy distribution is the disparity in consumption: poor households continue to rely more on free wood and biomass-based fuels, while wealthier households consume more subsidized LPG and thus capture a larger share of the benefits.
• Since May 2020, subsidies per cylinder have been effectively removed, but the COVID-19 pandemic has decreased incomes and increased the vulnerability of poor households, necessitating careful consideration of any new targeting mechanisms when subsidies are reintroduced.
• The research found no simple solution for improving subsidy distribution and suggests that volumetric targeting could be used to limit overall spending until the reasons for low consumption among the poor are understood and benefits for the wealthy are restricted.

APA

Bajaj,, S. S. M. A. (2021). How to Target LPG Subsidies in India: Step 2. Evaluating policy options in Jharkhand. International Institute for Sustainable Development. https://www.iisd.org/publications/target-lpg-subsidies-india-jharkhand

Chicago

Bajaj,, Shruti Sharma,Tom Moerenhout,Michael Aklin,Kavya. How to Target LPG Subsidies in India: Step 2. Evaluating policy options in Jharkhand. International Institute for Sustainable Development, 2021. https://www.iisd.org/publications/target-lpg-subsidies-india-jharkhand.

Wikipedia

{{cite report |last1=Bajaj, |first1=Shruti Sharma,Tom Moerenhout,Michael Aklin,Kavya |title=How to Target LPG Subsidies in India: Step 2. Evaluating policy options in Jharkhand |publisher=International Institute for Sustainable Development |date=20 May 2021 |url=https://www.iisd.org/publications/target-lpg-subsidies-india-jharkhand |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bajaj2021how, author = {Bajaj,, Shruti Sharma,Tom Moerenhout,Michael Aklin,Kavya}, title = {{How to Target LPG Subsidies in India: Step 2. Evaluating policy options in Jharkhand}}, institution = {International Institute for Sustainable Development}, year = {2021}, month = may, url = {https://www.iisd.org/publications/target-lpg-subsidies-india-jharkhand}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }