SUBSIDIES TO LIQUEFIED PETROLEUM GAS IN INDIA

This report by the International Institute for Sustainable Development (IISD) assesses a pilot program for Direct Benefit Transfer of liquefied petroleum gas (LPG) subsidies in the Mysore district of India. Based on surveys and focus groups conducted in October 2013, the report finds that the scheme faced significant administrative hurdles, caused financial instability for poor households, and led some users to return to biomass fuels, ultimately resulting in the program's suspension by the Ministry of Petroleum and Natural Gas on January 30, 2014.

• The Direct Benefit Transfer for LPG (DBTL) scheme required households to pay the full market price for cylinders in cash and receive the subsidy via electronic transfer to a bank account. However, 96 per cent of surveyed households found the process overly bureaucratic, reporting requests for various documents such as ration cards, electricity bills, and bank passbooks from multiple authorities.
• There were significant failures in the actual delivery of subsidy payments. 40 per cent of individual survey respondents reported not receiving the subsidy at all, while 72 other respondents received varying subsidy amounts, indicating a general lack of understanding regarding how the subsidy was calculated.
• The transition to bank-based transfers created significant time and financial burdens, particularly for rural consumers. Many beneficiaries lacked ATM cards or knowledge of how to use ATMs, requiring multiple time-consuming trips to bank branches to confirm and withdraw funds.
• The DBTL scheme disrupted household budget management and gender dynamics. Because gas connections were typically in the name of the male head of household, subsidies were deposited into their accounts, leaving women—who usually managed the budget—dependent on men for the funds, which were sometimes not provided for LPG purchases.
• The scheme led to negative behavioral shifts among poor households, including an increase in short-term, often interest-bearing borrowing to afford the decontrolled price of LPG cylinders (which rose to over INR 1,100). Some households reverted to using firewood or other biomass like coconut husks and tobacco waste for cooking.
• The DBTL pilot was widely unpopular, with over 60 per cent of individual survey respondents stating they did not prefer it over the previous subsidy system. The program was suspended on January 30, 2014, by the Ministry of Petroleum and Natural Gas following reports of design and administrative failures.

APA

Sharma, S. (2014). SUBSIDIES TO LIQUEFIED PETROLEUM GAS IN INDIA. International Institute for Sustainable Development. https://www.iisd.org/gsi/sites/default/files/ffs_india_lpg_mysore.pdf

Chicago

Sharma, Shruti. SUBSIDIES TO LIQUEFIED PETROLEUM GAS IN INDIA. International Institute for Sustainable Development, 2014. https://www.iisd.org/gsi/sites/default/files/ffs_india_lpg_mysore.pdf.

Wikipedia

{{cite report |last1=Sharma |first1=Shruti |title=SUBSIDIES TO LIQUEFIED PETROLEUM GAS IN INDIA |publisher=International Institute for Sustainable Development |date=May 2014 |url=https://www.iisd.org/gsi/sites/default/files/ffs_india_lpg_mysore.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sharma2014subsidies, author = {Sharma, Shruti}, title = {{SUBSIDIES TO LIQUEFIED PETROLEUM GAS IN INDIA}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = may, url = {https://www.iisd.org/gsi/sites/default/files/ffs_india_lpg_mysore.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }