With Jharkhand rolling out the direct benefit transfer (DBT) of kerosene subsidy, India has taken another step towards implementing a major governance reform.
In other parts of the country, direct transfer of food and fertilizer subsidies are already in place; for the kerosene subsidy, DBTs were scheduled to begin in April. However, the infrastructural framework—database of beneficiaries, their bank accounts and Aadhaar numbers—wasn’t ready.
DBTs have helped plug leakages in the distribution system, contain the black-marketing of subsidized goods and target beneficiaries better.
In the case of kerosene subsidies, these gains will be pronounced, as the poor man’s fuel has been especially susceptible to pilferage: about 40% of subsidized kerosene is diverted to adulterate diesel.
The centre’s letting oil marketing companies raise kerosene’s retail price is essential for subsidy rationalization, but enabling efficient access to it for the poor is the other half of the equation.