国际可持续发展研究所-印度如何瞄准液化石油气补贴（英文）-2021.5-58页_2mb

Summary of "How to Target LPG Subsidies in India: Step 2. Evaluating Policy Options in Jharkhand"

Core Content

This report, published by the International Institute for Sustainable Development (IISD) in May 2021, evaluates policy options for improving the targeting of LPG subsidies in Jharkhand, India. It is part of a series examining how energy subsidies can be better targeted to achieve equitable outcomes and reduce fiscal burden. The study is based on survey data from over 900 households in Jharkhand, focusing on LPG consumption, household expenditure, and asset ownership to assess subsidy distribution and potential reforms.

Main Views and Key Information

Why LPG Subsidies and Their Targeting Matter

• Affordability Barrier: LPG subsidies help address the affordability barrier to clean cooking fuel, especially for poor households transitioning away from traditional solid fuels that cause indoor air pollution.
• High Costs: LPG subsidies in India have grown significantly, reaching INR 54,518 crore (USD 7.74 billion) in FY 2019, which is 28% of all national energy subsidies.
• Fiscal Pressure: The global oil price crash due to the COVID-19 pandemic temporarily reduced LPG subsidy costs, but with oil prices recovering, there is a risk of increased costs unless subsidies are reformed.
• Growing Demand: Despite fiscal challenges, demand for LPG subsidies remains strong, especially among the most vulnerable.

Current Subsidy Distribution in Jharkhand

• Regressive Distribution: Existing LPG subsidies are regressive, with the top 40% of households (richest) receiving 53% of benefits in rural areas and 54% in urban areas.
• Poor Households: The bottom 40% of households receive only 28% and 27% of the total subsidy benefits in rural and urban areas, respectively.
• Consumption Patterns: Better-off households consume more subsidized LPG, leading to a concentration of subsidy benefits among them.

Policy Options Evaluated

1. Volumetric Targeting:

   • Description: Reduces the annual quota of subsidized LPG cylinders from 12 to 9 per consumer.
   • Results: Did not change the regressive distribution of subsidies but reduced total subsidy expenditure by 14% in rural areas and 19% in urban areas.

2. Differential Subsidy for PMUY Consumers:

   • Description: Provides a higher per-cylinder subsidy rate for PMUY beneficiaries (90%, 60%, 30%) compared to non-beneficiaries (30% on 9 cylinders).
   • Results: Increased the average subsidy received by all groups but had minimal impact on the regressive distribution. The richest 40% still received 52% of benefits in rural areas and 54% in urban areas, while the poorest 40% saw a slight reduction in benefits.

Recommendations

• Map the Knowledge Gap: There is a lack of up-to-date national data on the effectiveness and efficiency of LPG subsidies. A dedicated effort is needed to understand how subsidies are distributed across India.
• Test Smarter Indicators: Explore alternative targeting mechanisms such as wealth index, geographical targeting, or social categorical targeting (e.g., leveraging existing women-centric welfare schemes) to better restrict subsidies to lower-income households.
• Consider Volumetric Targeting: As a short-term measure, volumetric targeting can help reduce overall subsidy expenditure without significantly altering the distribution pattern, especially if other reforms are not yet feasible.
• Be Cautious in Reintroducing Subsidies: Given the increased poverty due to the pandemic, any new subsidy mechanism must be designed carefully to avoid worsening the situation of poor households.

Conclusion

The report highlights the need for more effective and equitable targeting of LPG subsidies in India, particularly in Jharkhand. While no single reform has emerged as a "magic bullet," the findings suggest that volumetric targeting could be a viable short-term solution to reduce fiscal costs. Long-term improvements require deeper understanding of consumption patterns and more refined targeting mechanisms that align with the socio-economic context of different states.

Key Data and Figures

• Total LPG Subsidies (FY 2019): INR 54,518 crore (USD 7.74 billion).
• Subsidy Distribution (by quintiles):
  • Rural: Top 40% received 53%, Bottom 40% received 28%.
  • Urban: Top 40% received 54%, Bottom 40% received 27%.
• PMUY Impact: As of FY 2019, PMUY had provided 80 million LPG connections, with some households still struggling to afford LPG due to repayment mechanisms.

Methodology

• Survey Data: Collected from over 900 households in Jharkhand.
• Household Categorization: Used expenditure quintiles, wealth index, and ration card data to assess subsidy incidence.
• Subsidy Estimation: Analyzed the distribution of benefits using statistical methods like Chi-square testing.

Acknowledgements

The report acknowledges contributions from various individuals and institutions, including ISEP, Morsel India, and peer reviewers from NRDC, CEEW, and SEI. It also thanks the governments of Sweden, Norway, and Denmark for their support.

Further Considerations

• Gender-Sensitive Targeting: PMUY’s focus on women from poor households is a key feature and could be leveraged to improve targeting in Jharkhand.
• Need for Innovation: There is a call to explore new indicators, such as motorcycle ownership, to better identify higher-income households and restrict subsidies accordingly.