PaHaL Scheme for Direct Benefit Transfer for LPG Subsidy

LPG being an essential commodity, its supply and distribution has been regulated by various regulations to control the trade and illegal diversion. However, the prevention of such activities has at best been minimal, primarily due to the large scale of the LPG supply chain. Over 16 crore households use it for cooking purposes at highly subsidized rates. To prevent this diversion PaHaL Scheme for Direct Benefit Transfer for LPG Subsidy was launched.

• PaHaL (Pratyaksh Hanstantrit Labh)) aims to reduce diversion and eliminate duplicate or bogus LPG connections. Under PaHaL, LPG cylinders are sold at market rates and entitled consumers get the subsidy directly into their bank accounts. This is done either through an Aadhaar linkage or a bank account linkage.
• Under the scheme, Consumers will pay the market price for the domestic cylinder and the subsidy will be transferred directly to their bank account. This removes the incentive to divert the domestic LPG cylinders, which moved in the supply chain at almost half of their real market price.
• Under aHal each LPG consumer will link his Aadhaar number in the LPG database and in the bank account database, and then the subsidy will be routed to the individual bank accounts in accordance with the delivery of LPG cylinders.
• PaHaL, which covers more than. 9.75 crore LPG consumers, is perhaps the world’s largest cash transfer program as compared to similar programs in other countries, such as China, Mexico and Brazil. 
• PaHaL aims to reduce diversion and eliminate duplicate or bogus LPG connections. 
• Scheme has witnessed massive enrolment in a short span of time. As on date, 9.75 crore LPG consumers have joined the scheme. This is 66% of the total consumer base of 15 crore. 
• The success of the scheme is a result of an intensive Information Education Campaign comprising advertising through various means, direct reaching out to consumers, and dealer level campaigns. The Ministry of Petroleum and Natural Gas has undertaken several innovative measures such as guardian officers for each district, deployment of technology by use of SMS, and a single window portal www.mylpg.in to enable consumers to join the scheme. This portal is an important step in bringing transparency and gives details of who is benefiting from subsidy.
• Objective of PaHal:

a) Remove incentive for diversion. 

b) Protect entitlement and ensure subsidy to the consumer. 

c) Improve the availability/delivery of LPG cylinders for genuine users

d) Weed out fake/duplicate connections

e) Allow Self Selection in subsidy

Benefit of PaHal:

A) To Government of India

i. Launch of PAHAL (DBTL) will reduce subsidy burden due to:

   a) Elimination of supply chain leakages and unauthorized usage.

   b) Allow consumers to opt out of subsidy, and

   c) Reduction in multiple connections by way of Aadhaar based De-duplication.

ii. Improvement in public service delivery

B) To LPG Consumers

i. LPG Consumers get LPG subsidy in cash directly in their bank account automatically. 

ii. With removal of incentive for diversion, the entitlement will be protected

iii. Improved availability of new LPG connections in the market

iv. Reduction in back-log due to reduced diversion

C) Oil Marketing Companies (OMC)

i. Reduction in administrative overheads due to:

   a) Lesser policing 

   b) Reduction in number of grievances related to unauthorized usage, diversion and delayed deliveries. 

   c) Public auditing of Subsidy 

ii. Allow focus on consumer relationship management

iii. Improved quality of consumer database which can be leveraged for better data mining leading to improved services. 

iv. Removal of multiple connections / fake & ghost LPG consumers.

v. Reduction in product shortage and better management of imports