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

This executive summary describes a report based on a survey of over 900 households in Jharkhand, India, which evaluates the targeting of LPG subsidies. It finds that subsidies are poorly distributed, with the poorest households receiving significantly less support than wealthier consumers, and suggests that policy-makers address the causes of low consumption among the poor and restrict benefits for the wealthy.

• LPG subsidies in Jharkhand are poorly targeted, with the poorest 40% of rural and urban households receiving less than 30% of government support in 2018/19. During this period, LPG subsidies accounted for nearly 28% of all Central Government energy subsidies.
• Poor households in India may receive half as much benefit from LPG support as wealthier consumers if current policy designs remain unchanged. This is driven by the fact that rural households often rely on free wood and biomass-based fuels, while wealthier households consume more subsidized LPG and thus capture a larger share of the subsidies.
• The primary obstacle to improving subsidy distribution is the disparity in consumption levels between poor and wealthy households. The report suggests that until the reasons for low consumption among the poor are addressed and restrictions are placed on benefits for the wealthy, volumetric targeting could be used to control overall expenditure.
• LPG subsidies per cylinder were effectively removed starting in May 2020. The subsequent COVID-19 crisis caused a dramatic fall in incomes, increasing the risk of households falling back into poverty and highlighting the need for careful design when reintroducing targeting mechanisms to avoid increasing hardships for the poor.

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} }