Story of the World’s Largest Cash Transfer Program – PAHAL

The Government of India provides domestic LPG at subsidized rates in 14.2 Kg cylinders at the consumers’ doorsteps through a massive LPG distributor network. LPG cylinders from over 186 bottling plants are sent to around 16000 distributors to serve more than 180 million domestic LPG consumers, covering more than half of the country’s population. The first 12 cylinders are sold at fixed subsidized price and subsidy borne by Government can at times go up to 50%, and added to up to $10bn per annum a few years ago. This created incentives for creation of ghost consumers, pilferage, diversion and inefficient allocation of resources.

The LPG supply chain has undergone a massive transformation through multiple initiatives in the last few years. These include bringing in transparency and convenience through a consumer portal MyLPG.in, business process re-engineering to eliminate human intervention in several critical processes and replace them through electronic interfaces and overhaul of the subsidy disbursement mechanism through the launch of direct cash transfer, called PaHaL. PaHaL is a scheme for transfer of LPG subsidy in bank account has eliminated leakages in subsidy, a phenomenon rampant in public distribution system and enabled targeting of subsidy to needy ones. PAHAL is registered in the Guinness book of records as the largest cash transfer scheme in the world. This is a transformational initiative that has empowered the consumer while removing inefficiencies and leakages from the public distribution system. A unique facet of the program is the GiveItUp campaign which led to 10m consumers voluntarily giving up subsidy in favor of the poor brethren.

Dr. Neeraj Mittal, a senior civil servant with Government of India and who is currently the Senior Advisor to the Executive Director India at the World Bank has designed these initiatives. He will talk to us about these reforms and how they can help many developing countries grappling with similar problems.

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Co-hosted with: International Development Group

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