Economic Survey suggests policy tweaks to improve voluntary surrender of LPG subsidies

The Survey suggested a strategy tweak for improving the scheme’s efficacy by maintaining a centralized list of names of those who had given up their subsidies, independent of the gas company, and displaying their photographs in the “scroll of honour". Currently, to find a name on the long lists, the consumer number of the subscriber needs to be entered.

This comes in the backdrop of marquee schemes such as the Pradhan Mantri Ujjwala Yojana (PMUY), which provides free cooking gas connections to poor families, contributing to the National Democratic Alliance’s (NDA’s) win in the 17th Lok Sabha elections.

“It can be further observed that north eastern states like Arunachal Pradesh, Nagaland, Manipur and Mizoram have higher rate of subsidy surrender as compared to larger states availing much more subsidy," the Survey said.

The scheme’s messaging was simple. For every household that gave up their domestic cooking gas subsidy, a below poverty line (BPL) household would receive a gas connection. “Given their inertia, of the nineteen crore people who did not give up their subsidy, many may have intended to give up their subsidy, but have simply not been nudged to action," the Survey added.

The Economic Survey 2019 has drawn on Nobel Laureate Richard Thaler’s behavioural economics theory to lay out what it describes as an “ambitious agenda" for behavioural change that will help India transit to a $5 trillion economy by 2024.

The Ujjwala programme, launched on 1 May 2016, aims to lay the basis for a fundamental transformation at the bottom of the pyramid by covering 715 districts. A cash assistance of ₹1,600 is given to each beneficiary to get a deposit-free new connection, thereby helping improve energy access. The connections are given in the name of the women heads of households. The scheme has gained traction with its ambit being expanded to include 80 million poor families from the earlier target of 50 million. Of these 73.11 million households got access to cooking gas under the scheme as on 3 July.

“The campaign also attempts to leverage the power of social norms, but with limited success. People act when they see others act. Information campaigns do not, however, adequately emphasize what the (metaphorical) neighbours are doing," the Survey said, adding: “People act positively when they see others act positively, and particularly when they can relate to such individuals. In fact, people can relate to others through even seemingly innocuous traits such as shared geographical locality. The ‘scroll of honour’ does not leverage this crucial insight, as people simply cannot find others they may know or can relate to."

In a case study, ‘Lighting up Lives through Cooking Gas and Transforming Society’, Prof. S.K. Barua, former director and faculty member of IIM Ahmedabad, said providing universal access to LPG has transformed the lives of the destitute.

“The lack of economic incentives in this programme means the campaign relies entirely on the better judgment of people to voluntarily give up their subsidies," the Survey said. “While this represents a good beginning, the potential to expand this number remains large."