Impact of LPG Subsidy on Household Consumption Expenditure: Evidence from Assam and West Bengal
DOI:
https://doi.org/10.68219/by6n8t65Keywords:
LPG Subsidy, Consumption ExpenditureAbstract
This study examines the association between government-subsidised liquefied petroleum gas (LPG) and household consumption expenditure in Assam and West Bengal using data from the Household Consumption Expenditure Survey (HCES) 2023–24. Using the number of subsidised LPG cylinders received per month as a proxy for LPG subsidy, the study estimates log-linear models using ordinary least squares (OLS), robust regression, and quantile regression. The results indicate a positive and statistically significant association between subsidised LPG and household consumption expenditure. The OLS and robust regression estimates suggest that an additional subsidised LPG cylinder is associated with approximately a 6% increase in household consumption expenditure, holding other factors constant. The quantile regression results further indicate a stronger association at the 30th percentile of the consumption-expenditure distribution, where an additional subsidised cylinder is associated with approximately a 7% increase in consumption expenditure. The findings suggest that LPG subsidies are associated with higher household consumption expenditure, particularly among households toward the lower end of the expenditure distribution.
Downloads
References
Barnwal, P. (2024). Curbing leakage in public programs: Evidence from India’s direct benefit transfer policy. American Economic Review, 114(12), 3812-3846.
Batdelger, T., & Zagdbazar, M. (2026). The heterogeneous impact of energy subsidy reform: The ill-targeted nature of energy subsidies in Mongolia. Energy Policy, 211, 115105.
Bharati, T., Qian, Y., & Yun, J. (2021). Fuelling the engines of liberation with cleaner cooking fuel (ERIA Discussion Paper Series No. 361; ERIA-DP-2020-34). Economic Research Institute for ASEAN and East Asia (ERIA).
Choudhury, D. K., Guptha, S. K., Gurung, R., & Behera, D. K. (2025). Impact of Pradhan Mantri UjjwalaYojana on LPG adoption and firewood use in India: a difference-in-differences approach. Environmental Research Communications, 7(8), 081012.
Coady, D., Parry, I., & Shang, B. (2017). Energy price reform: A guide for policymakers (CESifo Working Paper No. 6342). CESifo.
Cooke, E. F., Hague, S., Tiberti, L., Cockburn, J., & El Lahga, A. R. (2016). Estimating the impact on poverty of Ghana’s fuel subsidy reform and a mitigating response. Journal of Development Effectiveness, 8(1), 105-128.
Dev, S. M. (1998). Public distribution system: Impact on poor and options for reform. Gaikwad, H., Pandey, S., & Patil, K. (2024). Empowering rural Indian women by clean fuel initiatives: an impact assessment of Pradhan MantriUjjwalaYojana. Cogent Social Sciences, 10(1), 2428823.
Guta, D., Zerriffi, H., Baumgartner, J., Jain, A., Mani, S., Jack, D., Carter, E., Shen, G., Orgill-Meyer, J., Rosenthal, J., Dickinson, K., Bailis, R., & Masuda, Y. J. (2024). The impact of LPG consumption on cooking energy efficiency: Evidence from rural Indian household panel data. World Development Perspectives, 36, Article 100627. https://doi.org/10.1016/j.wdp.2024.100627
Heltberg, R. (2005). Factors determining household fuel choice in Guatemala. World Bank Policy Research Working Paper No. 3622. World Bank.
Jeuland, M., Desai, M. A., Bair, E. F., Cader, N. M. A., Natesan, D., Isaac, W. J., &Thirumurthy, H. (2023). A randomized trial of price subsidies for liquefied petroleum cooking gas among low-income households in rural India. World Development Perspectives, 30, 100490.
Kojima, M. (2021). Subsidizing bottled gas: Approaches and effects on household use. World Bank. http://hdl.handle.net/10986/35948
Kojima, M., Bacon, R., & Bhattacharya, S. (2010). Expenditure of low-income households on energy: Evidence from Africa and Asia. (Extractive Industries for Development Series No. 16). World Bank.
Pachauri, S., Brew-Hammond, A., Barnes, D., Bouille, D., Gitonga, S., Modi, V., Prasad, G., Rath, A., &Zerriffi, H. (2012). Energy access for development. In T. B. Johansson, A. Patwardhan, N. Nakicenovic, & L. Gomez-Echeverri (Eds.), Global energy assessment: Toward a more sustainable future (pp. 1401–1458). Cambridge University Press.
Patel et al. (2016), Patel, S., Khandelwal, A., Leavey, A., & Biswas, P. (2016). A model for cost-benefit analysis of cooking fuel alternatives from a rural Indian household perspective. Renewable and Sustainable Energy Reviews, 56, 291-302.
Siddig, K., Minor, P., Grethe, H., Aguiar, A., &Walmsley, T. (2015). Impacts on poverty of removing fuel import subsidies in Nigeria. World Bank Policy Research Working Paper, (7376).
Tamanna. (2026, June 15). Sustainable consumer behaviour and oral hygiene Effectiveness: A Comparative study of bamboo and nylon toothbrush users. https://ijcemr.nobleinkresearch.com/1/article/view/11
Timilsina RR, Rahut DB, Gautam MS, Mishra R and Sonobe T (2023) Are households shifting toward cleaner cooking fuel? Empirical evidence from India during 2005–2021. Frontiers in Environmental Economics. 2:1137248. doi: 10.3389/frevc.2023.1137248
