How to Target Electricity and LPG Subsidies in India: Step 1. Identifying Policy Options

The report highlights that India's energy access policies have achieved near-universal electricity access and high clean cooking uptake, but at a high cost, with electricity and LPG consumption subsidies totaling INR 87,830 crore in 2017. It argues that policy-making is hindered by outdated data, as the last distributional analysis of these subsidies relied on 2011 census data. To address this, the report recommends dedicated research into the distributional performance of current subsidies and the evaluation of various targeting options, including opt-out schemes, quota-based targeting, and income-based proxies.

• India has achieved nearly universal electricity access and significant adoption of clean cooking, but the associated consumption subsidies for electricity and liquefied petroleum gas (LPG) were costly, totaling INR 87,830 crore (USD 13.1 billion) in 2017.
• Evidence-based decision-making for subsidy targeting is currently limited by significant knowledge gaps, specifically because the most recent distributional analyses of how subsidy benefits are shared across income groups are based on outdated 2011 census data.
• The report recommends that research to inform policy design should evaluate several specific targeting interventions: opt-out schemes, categorical targeting, quota-based and volumetric targeting, and targeting based on income, assets, and consumption (including proxies), as well as the evaluation of opt-in schemes.
• Current policy discussions regarding cost reduction include the implementation of a Direct Benefits Transfer for Power (DBT-P) for electricity and a potential "Ujjwala 2.0" for LPG.

APA

AS (2019). How to Target Electricity and LPG Subsidies in India: Step 1. Identifying Policy Options. International Institute for Sustainable Development. https://www.iisd.org/publications/how-target-electricity-and-lpg-subsidies-india-step-1

Chicago

AS. How to Target Electricity and LPG Subsidies in India: Step 1. Identifying Policy Options. International Institute for Sustainable Development, 2019. https://www.iisd.org/publications/how-target-electricity-and-lpg-subsidies-india-step-1.

Wikipedia

{{cite report |last1=AS |title=How to Target Electricity and LPG Subsidies in India: Step 1. Identifying Policy Options |publisher=International Institute for Sustainable Development |date=20 December 2019 |url=https://www.iisd.org/publications/how-target-electricity-and-lpg-subsidies-india-step-1 |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{as2019how, author = {AS}, title = {{How to Target Electricity and LPG Subsidies in India: Step 1. Identifying Policy Options}}, institution = {International Institute for Sustainable Development}, year = {2019}, month = dec, url = {https://www.iisd.org/publications/how-target-electricity-and-lpg-subsidies-india-step-1}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }