PaHaL – Direct Benefit Transfer Scheme for LPG

The PaHaL (Pratyaksh Hanstantrit Labh) Scheme, officially known as the Direct Benefit Transfer for Liquefied Petroleum Gas (DBTL), is a flagship initiative of the Government of India launched to streamline the distribution of LPG subsidies directly to consumers’ bank accounts. Implemented by the Ministry of Petroleum and Natural Gas (MoPNG), the scheme represents one of the world’s largest direct benefit transfer (DBT) programmes and aims to ensure transparency, eliminate diversion, and curb subsidy leakages in LPG distribution.
Under PaHaL, consumers buy LPG cylinders at the market price, and the subsidy amount is directly credited to their bank account by the government. This system effectively delinks subsidy from product supply and ensures that it reaches only genuine, eligible beneficiaries.

Background and Evolution

Before the introduction of PaHaL, the LPG subsidy mechanism in India was prone to leakages, duplication, and diversion. Subsidised LPG cylinders, meant for domestic consumers, were often diverted to commercial and industrial use, causing a heavy fiscal burden on the exchequer.
To address these inefficiencies, the government conceptualised the Direct Benefit Transfer for LPG (DBTL) scheme in June 2013, initially rolled out in 20 districts across India. However, due to technical and implementation challenges, it was temporarily paused in early 2014.
After system enhancements and broader consultation, it was relaunched on 15 November 2014 as Modified DBTL (PaHaL) and extended to cover all districts by January 2015. The new version was more flexible, consumer-friendly, and integrated with the Aadhaar and banking systems.

Objectives of the PaHaL Scheme

The PaHaL Scheme was designed to achieve multiple objectives:

1. Ensure Subsidy Targeting: Deliver the LPG subsidy directly to the intended beneficiaries, reducing misuse.
2. Prevent Diversion and Black Marketing: Eliminate the sale of subsidised LPG for non-domestic purposes.
3. Enhance Transparency: Introduce accountability and traceability in the LPG subsidy system.
4. Promote Financial Inclusion: Encourage bank account linkage under the Jan Dhan Yojana and use of Aadhaar for authentication.
5. Reduce Fiscal Burden: Rationalise subsidy expenditure by preventing leakage and duplication.
6. Empower Consumers: Provide consumers the freedom to choose whether or not to receive a subsidy.

Mechanism and Working of the Scheme

Under PaHaL, the process of LPG subsidy transfer works as follows:

1. Purchase at Market Price:Consumers buy an LPG cylinder from their authorised distributor at the full market price (without upfront subsidy).
2. Subsidy Transfer:After purchase confirmation, the subsidy amount is automatically credited to the consumer’s bank account linked with their Aadhaar number or LPG consumer number.
3. Linkage Requirements:To avail of the subsidy, consumers must ensure:
   • Their LPG consumer number is linked with the bank account.
   • The same account is linked with Aadhaar (preferred but not mandatory under the modified scheme).
4. Cash Transfer Details:The subsidy amount varies based on market price fluctuations and is deposited for each refill, usually within a few days of purchase.
5. Consumer Identification:Consumers receive a Consumer ID, ensuring unique identification and preventing multiple connections per household.
6. Subsidy Capping:Consumers are entitled to receive a subsidy for 12 cylinders per household per year; any additional cylinders must be purchased at market rates.

Enrollment Options

The scheme allows for two modes of enrollment to ensure maximum coverage:

1. Aadhaar-Based Enrollment:
   • Consumers link their Aadhaar number to both their LPG consumer number and bank account.
   • The subsidy is then directly transferred to the Aadhaar-seeded account.
2. Non-Aadhaar (Bank Account-Based) Enrollment:
   • Consumers provide their bank account details directly to the LPG distributor.
   • The subsidy is transferred using the account information available with the distributor, even without Aadhaar linkage.

This dual-mode system ensures flexibility and inclusivity, especially for rural and unbanked populations.

Coverage and Implementation

• Implementing Agencies: The three major Oil Marketing Companies (OMCs) — Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) — implement PaHaL through their LPG distribution networks.
• Geographical Coverage: The scheme covers all 36 states and union territories.
• Scale of Operation:
  • Over 17 crore LPG consumers have been enrolled under PaHaL.
  • Over ₹1.2 lakh crore in subsidies have been directly transferred since launch.
  • As of 2024, the scheme has achieved more than 95% coverage of active LPG consumers.

“Give It Up” Campaign

In 2015, the government launched the “Give It Up” initiative, urging well-off citizens to voluntarily surrender their LPG subsidy.

• Millions of consumers opted out of receiving the subsidy to allow better targeting toward economically weaker households.
• The savings were redirected to fund schemes such as Pradhan Mantri Ujjwala Yojana (PMUY), which provides free LPG connections to poor women.

This initiative reinforced PaHaL’s core principle of targeted subsidy delivery and social responsibility.

Impact and Achievements

The PaHaL Scheme has been widely recognised for its success in promoting transparency, efficiency, and fiscal savings.

1. Substantial Fiscal Savings:

• The scheme has resulted in savings of over ₹50,000 crore (as estimated by the Petroleum Ministry) by eliminating ghost and duplicate connections.

2. Curbing Diversion:

• Diversion of subsidised LPG to commercial and industrial users has drastically reduced.

3. Improved Targeting:

• Subsidy benefits now reach genuine consumers directly, based on verified identity and bank linkage.

4. Digital Governance:

• PaHaL strengthened the use of Aadhaar, Jan Dhan accounts, and DBT systems, supporting India’s broader digital governance and financial inclusion agenda.

5. International Recognition:

• The Guinness Book of World Records (2017) recognised PaHaL as the world’s largest direct benefit transfer scheme.

6. Empowerment of Consumers:

• Consumers have gained autonomy, with full transparency regarding subsidy receipts through SMS alerts, mobile apps, and online portals (e.g., www.mylpg.in).

Challenges and Limitations

Despite its success, the scheme faces certain operational challenges:

1. Bank Linkage Issues:Some consumers, especially in remote areas, face difficulties linking bank accounts or Aadhaar due to limited access to banking facilities.
2. Awareness and Digital Literacy:Limited understanding of DBT processes among rural consumers can cause delays in subsidy receipt.
3. Technical Glitches:Errors in Aadhaar seeding, duplicate accounts, or bank data mismatches sometimes lead to failed transactions.
4. Exclusion Risks:Vulnerable groups without formal bank accounts or Aadhaar IDs may face temporary exclusion from benefits.
5. Price Volatility:Frequent changes in international LPG prices influence the subsidy amount, leading to uncertainty for consumers.

Technological and Administrative Support

• mylpg.in Portal: Consumers can check refill status, subsidy details, and link bank accounts online.
• SMS Notifications: Consumers receive real-time alerts for booking, delivery, and subsidy credit.
• Integration with Aadhaar and NPCI Systems: Ensures secure and efficient fund transfer through the National Payments Corporation of India (NPCI).
• Help Desks and Toll-Free Numbers: Established to assist consumers with enrollment and grievance redressal.

Significance

The PaHaL Scheme has far-reaching implications for governance and social policy in India:

• Promotes Good Governance: By reducing leakages and ensuring transparency in subsidy distribution.
• Supports Fiscal Discipline: Rationalises government expenditure on LPG subsidies.
• Advances Digital India and Financial Inclusion: Strengthens digital payment systems and bank penetration.
• Empowers Women: Especially rural women under Ujjwala Yojana who benefit from cleaner fuel access.
• Enhances Energy Equity: Ensures that subsidies are targeted to those most in need.