Evaluation of the Pilot Project on Direct Transfer of Kerosene Subsidies in Kotkasim, Alwar

The evaluation of the Kotkasim pilot project reveals that while direct cash transfers effectively reduced kerosene leakages to the black market, they also led to a dramatic decline in household kerosene consumption due to higher upfront costs and poor banking access. The study highlights significant implementation gaps, including inadequate information dissemination and the financial burden placed on Fair Price Shop (FPS) dealers. Recommendations include improving financial literacy, digitizing records, and ensuring better coordination between district authorities and beneficiaries.

• The pilot project succeeded in curbing the diversion of kerosene to the black market, but also contributed to a sharp decrease in household kerosene consumption due to high upfront prices, limited banking access, and general uncertainty regarding subsidy transfers.
• Kerosene sales in the Kotkasim block fell by more than 50%, dropping from 90.8 kilolitres between December 2011 and June 2012 to 35.4 kilolitres between July 2012 and January 2013, and further to 17.9 kilolitres by August 2013.
• There was a significant failure in communicating the scheme's mechanics to beneficiaries; 90% of respondents relied on Fair Price Shop (FPS) dealers for information, and many did not understand that subsidy transfers were contingent on actual kerosene purchases.
• Banking infrastructure proved to be a major barrier, with households in villages like Nangal Saliya and Gheekaka facing distances of 4 to 15 km to the nearest bank, leading to irregular passbook updates and perceptions of non-receipt of subsidies.
• Fair Price Shop (FPS) dealers experienced the most significant negative impact, suffering revenue losses from decreased commissions and the elimination of profits previously gained from diverting kerosene.
• In the early stages of the pilot, some FPS dealers attempted to force kerosene consumption by making the purchase of other ration items, such as wheat and salt, conditional upon buying kerosene.
• The high level of electrification in the Kotkasim block resulted in a high price elasticity for kerosene, meaning households quickly reduced consumption when the subsidized price was replaced by the market rate.
• The study found that kerosene was not a primary energy source for most surveyed households, with 65% of households using LPG and many others relying on biomass for cooking.

APA

International Institute for Sustainable Development (2014). Evaluation of the Pilot Project on Direct Transfer of Kerosene Subsidies in Kotkasim, Alwar. https://www.iisd.org/gsi/sites/default/files/ffs_india_kerosene_alwar_final.pdf

Chicago

International Institute for Sustainable Development. Evaluation of the Pilot Project on Direct Transfer of Kerosene Subsidies in Kotkasim, Alwar. 2014. https://www.iisd.org/gsi/sites/default/files/ffs_india_kerosene_alwar_final.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Evaluation of the Pilot Project on Direct Transfer of Kerosene Subsidies in Kotkasim, Alwar |date=April 2014 |url=https://www.iisd.org/gsi/sites/default/files/ffs_india_kerosene_alwar_final.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2014evaluation, author = {{International Institute for Sustainable Development}}, title = {{Evaluation of the Pilot Project on Direct Transfer of Kerosene Subsidies in Kotkasim, Alwar}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = apr, url = {https://www.iisd.org/gsi/sites/default/files/ffs_india_kerosene_alwar_final.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }