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

This report evaluates a pilot project launched in December 2011 in Kotkasim, Alwar, Rajasthan, which tested the direct transfer of kerosene subsidies to the bank accounts of ration cardholders. The project aimed to reduce leakages and black-marketing inherent in the Public Distribution System (PDS). While the scheme successfully reduced kerosene sales and plugged leakages, it also led to a decline in consumption due to higher upfront costs and poor banking access. The evaluation highlights significant challenges regarding beneficiary awareness, banking infrastructure, and the financial losses suffered by Fair Price Shop (FPS) dealers.

• The pilot project in Kotkasim led to a drastic reduction in kerosene sales, falling from 90.8 kilolitres (kl) between December 2011 and June 2012 to 17.9 kl between February 2013 and August 2013.
• The decline in kerosene consumption was driven by several factors: the elimination of leakages to the black market, higher upfront retail prices, and a perception among households that subsidies were not being received in their accounts.
• Beneficiary awareness of the scheme was poor; 89 per cent of surveyed households only became aware of the project after its launch, and over 90 per cent relied on Fair Price Shop (FPS) dealers as their primary source of information.
• Banking access posed a significant barrier to the scheme's effectiveness. While 75 per cent of households reported receiving subsidies, many faced long distances to banks (up to 10-15 km for some villages), long queues, and a lack of understanding of the banking system.
• Fair Price Shop (FPS) dealers experienced the most significant negative impact, suffering revenue losses due to falling sales and the removal of profits previously gained from diverting kerosene.
• In the initial phases of the project, some FPS dealers attempted to force kerosene consumption by linking the sale of other ration items (such as wheat, tea, salt, and spices) to the mandatory purchase of kerosene.
• The study concludes that the choice of Kotkasim for the pilot was influenced by high electricity access, which resulted in a high price elasticity of demand for kerosene, meaning consumption dropped quickly when prices rose.
• The report recommends improving financial inclusion through the 'banking correspondent' (BC) model, potentially appointing FPS dealers as BCs to resolve distance and accessibility issues.

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} }