Reviewing and reforming liquified petroleum gas subsidy regime

Subsidies are one of the most powerful policy tools in the hands of the government. In India, as elsewhere, subsidies have been used for decades to achieve a range of economic, social and environmental objectives. Liquified Petroleum Gas (LPG) subsidies have been criticized on a number of grounds. The prices for LPG are regulated by the Indian government, resulting in substantial subsidy payments from the government budgets which are often poorly targeted and which fail to reach intended beneficiaries. In this paper an attempt has been made to review recent subsidy policy Direct Benefit Transfer for domestic LPG (DBTL) scheme and identify priorities going forward. It will put the emphasis on the social and political challenges associated with reform, and seek practical changes that safeguard the poor and vulnerable.