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The things we do: Nudging people to give

Roxanne Bauer's picture

Man delivers gas cylinders in IndiaIn an appeal to civic duty, the Government of India is asking citizens to forgo a gas subsidy they receive so that gas cylinders can be transferred to the less fortunate. To encourage Indians to "Give It Up," the government called on business leaders to set an example and made the procedure extremely easy.

India recently launched an ambitious cash transfer program to help small businesses and households buy fuel.  Under the plan, consumers of liquefied petroleum gas (LPG), commonly referred to as propane or butane, receive a cash subsidy in their bank accounts to buy gas cylinders at market price.

Once joining the scheme, the subsidy, which is equal to the difference between the current subsidized rate and the market price, is transferred to the consumer’s bank account when he/she orders a cylinder.  Another transfer is then provided at the time of delivery of the cylinder. 

Last November, the Direct Benefit Transfer Scheme for LPG was rolled out across 54 districts, with the rest of the country participating by January 1 of this year. 

The scheme was launched by India’s previous UPA government in June 2013, but it was abruptly stopped earlier this year following court orders.  It has since been modified to exclude the requirement of providing a unique identification number (Aadhaar) to avail the cash subsidy.

The idea behind the direct benefit transfer is that it can ensure that the subsidy meant for the genuine domestic customer reaches them directly and is not diverted. The Government of India hoped to save millions each year by curbing diversions and leakages in the system but also to ensure efficient delivery of subsidies to the target beneficiaries— the consumers.

Enter Modi

Prime Minister Narendra Modi, elected in May 2014, recently asked banks and industrial houses to nudge their employees to surrender their subsidies.  He introduced the idea in his “Give It Up” campaign on March 27 that asks well-off people to give up their LPG subsidy— not as a cost-saving mechanism but so that the Government of India can transfer their cylinders to poor households that traditionally use firewood for cooking.  

“Give up voluntarily. If one crore people give up this gas cylinder subsidy... one crore poor families who burn firewood, which leads to deforestation, carbon emission (and) their children grow up in smoke... The cylinder (subsidy) you give up should reach to the house of that poor,” he said.

Focus on the Social

A 2013 study, conducted by the UK Cabinet Office Behavioural Insights Team in partnership with the Charities Aid Foundation (CAF) and the University of Bristol's Centre for Market and Public Organisation, states that an effective way to encourage individuals to act in a desired way is to “focus on the social”.  People are influenced by the actions of those around them and are more likely to give to charity if they perceive giving as the social norm. Focusing on the social, therefore, can include using prominent individuals to send social signals, drawing on peer effects by making acts of giving more visible to others within one’s social group, or establishing group norms around which subsequent donors ‘anchor’ their own gifts.

Company philanthropy campaigns can use these tactics. Employees are more likely to respond to a letter asking for a donation if the chief executive's signature is on it. Likewise, employees tend to give if they see their peers receiving formal recognition or additional respect for doing so.

Just three days after Modi called on the well-off to give up their LPG subsidy, Gautam Adani, an Indian business tycoon and the chairman and founder of Adani Group responded.  Adani nudged his employees to participate in the Give It Up campaign by signing a letter to all of the group’s nearly 8,000 employees in India.  The letter asks employees to opt out of the LPG subsidy, with the form for opting out attached. The company’s administration and human resources teams were also put on notice to support employees who signed the form to opt out.  Similarly, Tata group Chairman Cyrus Mistry endorsed the campaign, and 200 of the 1,500 distributors in Maharashtra state (which includes Mumbai) have chosen to opt out of the subsidy, with more are expected to follow suit. 

The endorsements from Adani, Mistry, and the LPG distributors focus on the social by making the action to forfeit the subsidy visible to others and by normalizing the idea.

Make it Easy

The behavioral insights study also suggested that an effective way to increase giving is to “make it easy”. If an organization wants to encourage someone to do something, it should make it as easy as possible for them to do so. This includes setting defaults that automatically enroll staff into giving schemes (with a clear option to decline), providing the necessary forms and paperwork to employees along with the request to donate, and setting up donation boxes or online systems that streamline the giving process.

The Government of India has made giving up an LPG subsidy extremely easy. A customer can log on to the following sites: mylpg.in, giveitup.in, ebharatgas.com, indane.co.in, hpgas.com to register his/her account details and selecting to decline the subsidy. Those not wanting to go online could give up subsidy of their LPG connection by sending a text message. For example, Bharatgas customers can text GIVEITUP to 7738299899.  Customers also have the option of downloading an app to give up their subsidy.
 
Those who are less inclined towards electronic processes, can go to their agency and fill out a form to give up their subsidy. The form is available at any distributor, and the customer simply needs to provide their consumer number and signature. The rest will be taken care of by the distributor. Finally, individuals can give their consumer number to the “gas delivery boy” who will provide them with a form and who can give it to the distributor.
 
Moreover, public sector oil marketing companies (OMCs) have given consumers the option to convert their current domestic LPG connection into a non-subsidized domestic connection.

This is not the first time a national leader has asked people to sacrifice for the greater good.  The second Prime Minister of India, Lal Bahadur Shastri, asked citizens to give up one meal a week so that the country could tackle food its shortage, and U.S. President John Kennedy famously challenged Americans to, "Ask not what the country can do for you... ask what you can do for the country."  Modi's request that people give up their LPG subsidy might not be quite as dramatic, but he is appealing to a basic sense of civic duty and compassion for the poor. The LPG subsidy was meant to help people below the poverty line, to make cooking fuel affordable.  Even though the subsidy is untargeted, that does not stop people and businesses alike from giving it up— especially when it’s normal and so easy to do so.
 

Photograph by Meena Kadri, via Flickr
 
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Comments

Submitted by P N seth on

Procedure for opting out of subsidy should be made simpler only declaration on plain paper should be sufficient

Submitted by Arvaj siddiqui on

Ghatampur indane gas ..
Time se delivery nhi hoti hai..

Submitted by SARA KHEL on

First all politicians of all parties must set an example, hotels & bulk consumers, followed by bureaucrats and central government and state government employees, then employees in government sector (Central or state), then private sector company employees. Then let us know how much does the government save on subsidies. Then let us know how much more subsidies to be saved from unorganized sector, individuals etc.

Submitted by SB on

I agree. In a country like India (heavy deficit) every spending should be backed by business case. When you talk about charity, instead of statue (spending million) build a primary school or hospital. God knows what will happen to saved money by this voluntary opt out. First show us (public) that you (our gov) are actually keeping account of all the money saved and spent back on a right way. That will indeed encourage others to contribute.

Submitted by Sangram Joshi on

Yes I did it. Instead of blaming the politicians and who should do what let us be the change we want to see.It gives a lot of peace.
God bless India.

Submitted by happy on

at first subsidy for all ministers from all canteens of all ministries Must b stopped....then expect it from others..so that an example can b set for all india...

Submitted by Mahesh on

Dear Members of parliament fist give up food subsidy at parliament canteen and then ask common man to give up subsidy

Submitted by Alok kumar das on

Right

Submitted by Sarveshwar on

Oh wait, so now I can give up subsidy (approx. 300 INR) and then I must pay the goons of the distributors a sum of 50 to 100 INR for delivering the LPG cylinder at my doorstep. If not paid they even refuse to deliver the cylinder in future. So that adds up to a sum of 450 INR (LPG cylinder cost with subsidy), 300 INR (the subsidy) and 100 INR for delivery goon totalling 850 INR. And where does the money go? Down the drain for sure. No thank you. I'll keep the subsidy.

Its a joke like all the jokes played by the governments here.

Submitted by SHAJEE BABU on

If its one time pay everybody will be log in to this campaign.

If once join any option to come out or chance to retun balance amt in next delivered time

Submitted by gupteshwar pd sinha on

The appeal made by the Prime minister to banks ,industrial houses and well off people to give up LPG subsidy has received good response.Is our PRIME MINISTER not aware that MP AND MLA are availing number of previlages which cost a lot and handsome subsidy bring burden to nation. Hope the Prime ministers extends his appeal to politician to forgo their subsidiary which they get in canteen attached to parliament besides curtlaing their facility travel (free)

Submitted by Monish kumar on

I too have left the LPG subsidy . If you look at the annual outgo its approx Rs 1500.
We need to come out of the blame game and act with maturity. GOD BLESS INDIA

Submitted by piyush singh on

few lines for PM Modi......
Badiya kam kiya hai aapne sir, ab tak 4010607 logo ne subsidy Give Up kar diye hai...aap logo ko ye btaye ki logo se aaye paise aapne kaha invest kiye jisse below poverty line ke logo ko fayda pahocha hai...agar aapki bato se desh me reh rahe dusre logo par thoda bhi asar padega to wo jarur apni subsidy bhi Give Up kar dege...!! 125 cr ki population wali ye country hai humare log bahot hi dayalu hai abhi tab to kewal 400k logo ne hi subsidy give up kiya hai..aapke dwara kamo ka vivran dene ke pashchat ye sankha cr me hogi cr me....!!
dhanyavad

Submitted by jignesh on

my father did not know give it up subsidy meaning details. he thikn only one reffile deducted subsidy not every time now 5 cycliender received but subsidy not received in bank account consu.no 02157

Submitted by jay prakash kumar on

gass subsidriy nahi mel hai kripaya gass subsitary jald se jald bheje

Submitted by sajidumri on

گیاس سبسیڈیغریب عوام کا حق ھے اگر ھندوستان میں رزوت خوری بند ھوجائے اور ھمارے رھنما ملک وقوم کی بھلائی کے لئے کام کریں تو د امیں ھمارے ملک کو سوپر پور بننے سے کوئی نھیں روک سکتا

Submitted by gulshan thakur on

Parliment mai roj kitne cylinder lagte hai kitne mla mp ne subsidy choody sansad mai roj mla mp ka kharcha public ke paise waste karte hai modi ji aap hamesha toor pe hi rehte ho kitna loos hai india ko koi hisab hai

Submitted by sajidumri on

Subsidy is right off poor pouple's. Curroption con India make on اگر ملک سے رزوت ختم ھوگی تو سوپر پور بننے سے کوئی نھیں روک سکتا

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