The need to prioritize consumption: A difference-in-differences approach to analyze the total effect of India's below-the-poverty-line policies on LPG use

Abstract

In 2016, India introduced the Pradhan Mantri Ujjwala Yojana (PMUY) policy, which offers below-the-poverty-line (BPL) households a free liquified petroleum gas (LPG) connection. Simultaneously, the National and State governments implemented numerous health, housing, and other programs also targeting BPL households. Using a difference-in-differences approach with a non-equivalent comparison group, we provide causal evidence of the total effect of BPL policies on the probability of obtaining an LPG connection, overall LPG consumption, opting for home delivery, and clean cooking access. Using a two-part model of LPG use, the total effect of the policies is a 7.9 and 8 percentage point increase (46.4% and 50.0% change) in the probability of an increase in any positive LPG use for BPL households but no change in the magnitude of LPG use among households with any positive LPG use. We calculate that the overall increase in LPG use due to BPL policies was 0.68 kg per household. We find no effect for home delivery or cooking energy access tier. Our work suggests the need to expand the policy to address consumption more effectively. Finally, this analysis advocates investigation into consumption incentives and the size of the refill subsidy beyond simply improved targeting of BPL households.