Policy Wise: India’s Power Sector

[op-ed snap] A half-done reform: On LPG subsidy

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Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Op-ed discusses about governments new decision to do away with the subsidy for cooking gas and subsidy burden on government.

Once you are done reading this op-ed, you will be able to attempt the below.

Direct cash transfers have the potential to improve the economic lives of the poor by transferring benefits to households quickly and directly. Achieving these benefits requires thoughtful design of schemes, and careful, rigorous analysis of ongoing programmes is an important input to the design process. Discuss

From UPSC perspective, the following things are important:

Prelims level: DBT

 Mains level: Wasteful subsidies in India, Direct benefit transfer



  1. The government decided to completely do away with the subsidy offered to cooking gas used for household purposes
  2. Public sector oil companies were authorised to incrementally hike the “effective price” of LPG cylinders until the entire subsidy is wiped off by March next year.

Burden of government

  1. Fall in global crude oil prices, has already eased the burden on the government.
  2. In the latest Union budget, the government allocated about ₹25,000 crore towards oil subsidy, which is a fourth of the total oil subsidy bill (of almost ₹1 lakh crore) incurred in fiscal year 2013.
  3. The implementation of the direct transfer of cash benefits has already helped in the better targeting of subsidies to the poor, thus substantially reducing wasteful spending.

How cut in subsidies will help?

  • The cut in subsidy would further strengthen fiscal discipline.

Way forward?

  1. Sustainably lower the price of cooking gas once and for all, getting the government out of the business of managing subsidies.
  2. Deregulating the market for cooking gas, thus opening it up to more widespread market competition, would also help.


Direct benefit transfer 

Refer : Civilsdaily


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