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More Ghost Savings: Understanding the fiscal impact of India’s direct transfer program - Update

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More Ghost Savings: Understanding the fiscal impact of India’s direct transfer program - Update

The Government of India claims to have saved over 2 billion dollars in the first year of the operation of its direct benefits transfer scheme for LPG (DBTL). This policy brief tests this claim. 

In early 2015, the Government of India implemented reforms to the system of domestic LPG subsidies, replacing integrated consumer price subsidies with a system of electronic transfers through the Direct Benefit Transfer for Liquefied Petroleum Gas (LPG) scheme.

The Government of India has claimed that, by improving the operational efficiency of the LPG subsidy system, DBTL resulted in significant savings in total fiscal expenditure on LPG subsidies in fiscal year 2014-15. While initiatives which predated the introduction of DBTL have been successful in identifying and blocking irregular connections, IISD’s analysis of publicly available data suggests that DBTL itself had little impact on total fiscal expenditure in fiscal year 2014-15.

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