SUBSIDIES TO LIQUEFIED PETROLEUM GAS IN INDIA

The report evaluates a pilot program in Mysore, India, where LPG subsidies were transitioned from price-point subsidies to electronic cash transfers (DBTL). Based on interviews with 120 beneficiaries and focus group discussions, the study finds that the scheme faced significant administrative hurdles, including excessive paperwork and failures in subsidy delivery. It highlights negative impacts on household behavior, such as increased short-term borrowing and a return to biomass fuels for cooking due to the higher upfront cost of unsubsidized cylinders. The report concludes that the pilot was poorly implemented and generally preferred the previous subsidy system.

• The DBTL scheme was characterized by excessive administrative requirements, with 96% of surveyed households agreeing that the process required too much paperwork, including requests for electricity bills, ration cards, and bank passbooks.
• There were significant failures in the actual transfer of subsidies; 40% of individual survey respondents reported not receiving the subsidy at all, and 72 respondents reported receiving inconsistent subsidy amounts.
• The transition to electronic transfers created financial and time burdens, particularly for rural consumers and women. Many beneficiaries lacked ATM-compatible cards and had to make multiple time-consuming trips to banks to withdraw funds.
• The requirement for subsidies to be deposited into the bank account of the male head of household destabilized household budget management, as women—who typically manage expenditures—became dependent on men to provide the funds for LPG purchases.
• The DBTL scheme led to a shift in household behavior, including an increase in short-term, often interest-bearing borrowing to afford the unsubsidized market price of LPG cylinders, which rose to over INR 1,100 during the study.
• Budgetary constraints caused by the new system led some households to substitute LPG with firewood or other biomass (such as coconut husks or tobacco waste), contradicting the government's goal of promoting cleaner fuels.
• Beneficiaries generally viewed the DBTL system negatively, with over 60% of individual survey respondents stating they preferred the previous LPG subsidy system.

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} }