The Economic Survey has said that the proportion of liquefied petroleum gas (LPG) subsidies that goes to the poor, in both rural and urban areas, was low. This finding is bound to provide fuel to the debate on whether the rich should continue to be supplied cooking gas at subsidised rate.
Making a case for containing subsidies through better targeting, the Survey said the reach of subsidies on LPG “is highly unequal amongst the poor and rich in rural and urban area.”
Using the data of the 64 Round of National Sample Survey, it found that there was a significant inequality in the proportion of subsidies received by the poorest and richest households in rural areas.
The distribution was more equitable across urban households, it said.
The Survey categorised both rural and urban households into quintiles based on their per capita household expenditure. Based on the reported spend of the households on LPG, it calculated the share of each quintile in the total expenditure on LPG.
In rural areas, the Survey found the proportion of subsidies that went to the poorest quintile was a mere 0.07 per cent as compared to 52.6 per cent for the richest quintile.
Though the proportion of the subsidies that reached the poor in urban areas is also low (around 8.2 per cent), there was more equitable distribution across the remaining quintiles — 19 per cent, 24 per cent, 25 per cent and 23 per cent, respectively.
