Advisory on cooking gas subsidy in India and redistribution of savings to the low-income segment

• Oct 29, 2018
• 2 min

MSC designed processes to route the subsidy for LPG (cooking gas) that the government in India provides to eligible beneficiaries. Once the LPG subsidy rolled out, MSC helped the government to improve the execution and communication of the program. The government redistributed the savings from this program to low-income households under the Pradhan Mantri Ujjwala Yojana (PMUY) initiative. After PMUY launched, MSC helped the government to assess the implementation, with an impact on nearly 50 million rural and urban households.

The Indian government subsidizes LPG (cooking gas) for eligible low-income beneficiaries. MSC designed processes to route the subsidy to the bank account of beneficiaries. After the Indian government implemented the process and removed duplicate entries in the beneficiaries’ database, about 35.6 million duplicate accounts out of the total 182 million were eliminated from the system.

Upon a successful roll-out of routing the LPG subsidy, MSC helped the government to improve the execution and communication of the program. We also helped to prepare and structure the “Give It Up” campaign, under which economically better off people were urged to give up their subsidy. As a result, over 10 million people in the country gave up their subsidies. The government estimates a savings of about USD 3.23 billion through the implementation of these reforms. The success of this program convinced the government to move to digitize social benefits transfers across a range of initiatives.

The government redistributed the savings from this program by providing free cooking gas and cook stoves to low-income households under the Pradhan Mantri Ujjwala Yojana (PMUY) initiative. After PMUY launched, MSC helped the government to assess the implementation. We conducted three rounds of assessment for the program, which resulted in important changes to delivery approaches and safety messages, with an impact on nearly 50 million rural and urban households.

The impact of Ujjwala has been transformational. MSC’s studies show that this program had an impact on health, gender empowerment, and the social structure in rural areas. MSC also provided recommendations to the government to improve the affordability and accessibility of LPG refills in rural areas further.