







































Ecology, Economy, and Society–the INSEE Journal 7(1): 47-73, January 2024 

RESEARCH PAPER 

Cooking with Modern Energy in Rural Households of 
India: A Cost–Benefit Analysis 

Krittika Roy* 
 
Abstract: Between 2016 and 2019, there has been an improvement in the percentage 
of rural households using clean cooking energy, partly owing to government 
interventions. However, unclean solid fuels are still the primary source of energy for 
cooking purposes for about 60% of rural households. One of the foremost reasons 
for this is the cost of acquiring and using clean energy sources. This paper estimates 
the cost incurred by a household when switching from solid fuels to liquefied 
petroleum gas (LPG) or electricity for cooking, followed by a social cost–benefit 
analysis of two interventions: universal provision of LPG to all rural households and 
universal provision of electricity to all rural households. The findings suggest that 
electricity is a cheaper alternative to LPG at the household level; however, investing 
in the universal provision of LPG is socially beneficial for the government. Universal 
provision of electricity for cooking can only become socially beneficial if the 
proportion of renewable electricity increases, reducing the environmental costs of 
carbon emissions from coal-based power plants. 
Keywords: LPG, Electricity, Rural, India, Cost–benefit analysis 
JEL codes: Q410, Q480 

 
1. INTRODUCTION 

Globally, the transition to cooking with clean fuels has been slow: from 2010 
to 2019, there has been an increase of only 1% in the population that has 
access to clean fuels and technologies. This is partially an outcome of 
interventions promoting clean cooking in developing countries in the last 
decade. Nevertheless, 52% of the global rural population is still dependent 
on solid, polluting sources of energy to meet their primary cooking needs. 
The combustion of solid fuels is associated with indoor air pollution through 
the emission of hazardous gases such as carbon monoxide, nitrogen dioxide, 
and polycyclic aromatic hydrocarbons in addition to inhalable particulate 

 
* Senior Research Fellow, Economic Analysis Unit, Indian Statistical Institute, Bangalore. 

roykrittika26@gmail.com 

Copyright © Roy 2024. Released under Creative Commons Attribution © NonCommercial 

4.0 International licence (CC BY-NC 4.0) by the author.  

Published by Indian Society for Ecological Economics (INSEE), c/o Institute of Economic 
Growth, University Enclave, North Campus, Delhi 110007.  

ISSN: 2581–6152 (print); 2581–6101 (web).  

DOI: https://doi.org/10.37773/ees.v7i1.998  

mailto:roykrittika26@gmail.com
https://doi.org/10.37773/ees.v7i1.998


 Ecology, Economy and Society–the INSEE Journal [48]  

matter that adversely affects the health of women and children exposed to it 
(Gould and Urpelainen 2018; Masera, Saatkamp, and Kammen 2000). Indoor 
air pollution has a significant disease burden, causing about 3.2 million deaths 
per year in 2020, which includes 237,000 children below the age of five 
(WHO 2022). 

LPG and electricity are both products of fossil fuels, but they have a higher 
energy content compared to solid fuels and cause minimal smoke emission 
on combustion. As a result, the transition to LPG or electricity for cooking 
can not only help reduce indoor air pollution but also help save time spent 
on cooking. By virtue of being clean, modern fuels occupying the top level 
of the energy ladder, LPG and electricity are both expensive fuels. Cost is 
one of the prominent barriers when it comes to making a transition to these 
fuels (World Bank 2003; Reddy 2003; Gupta and Ravindranath 1997; Farsi et 
al. 2006; Jeuland and Pattanayak 2012; Jain et al. 2015). While some studies 
find that the upfront or fixed costs of acquiring clean cooking energy or 
stoves are obstacles to the adoption of clean fuels such as LPG (Farsi, 
Filippini, and Pachauri 2007), other studies have shown that the recurring 
cost of refilling LPG cylinders, rather than the capital cost, can lead to low 
adoption of LPG, especially among poor households (Jeuland and Pattanayak 
2012; Isihak, Akpan, and Adeleye 2012; Bruce et al. 2017). 

The adoption of clean fuels as the primary energy source for cooking has 
been low in India, especially among rural households. Between 2016 and 
2019, the percentage of rural households using LPG almost doubled from 
20% to 39.7%. On the other hand, the percentage of rural households using 
electricity for cooking remained less than 2% (IIPS 2022). This period 
coincides with the launch and implementation of both the Pratyaksh 
Hanstantrit Labh Scheme (PAHAL Scheme, also known as the Direct 
Benefit Transfer of LPG Scheme)—for more efficient LPG subsidy 
deployment—as well as the Pradhan Mantri Ujjwala Yojana (PM Ujjwala)—
for increasing LPG accessibility to poor households. This period also marks 
the growth of rural electrification access from 56.6% to 99% in 2020 (IIPS 
2022; IIPS 2017). However, despite the increasing access to LPG and 
electricity, the disease burden attributable to indoor air pollution in 2019 was 
still 0.6 million deaths and more than 20 million disability-adjusted life years 
(DALYs), primarily from ischaemic heart disease, chronic obstructive 
pulmonary diseases, lower-respiratory-tract infections, and stroke (Pandey et 
al. 2020). These figures show that it is imperative to transition to clean 
cooking to reduce indoor air pollution and the associated disease burden, and 
government intervention is crucial to achieve this transition. 

Cost–benefit analyses were used extensively in the 1950s, primarily for the 
appraisal of water-related projects (Eckstein 1958; Krutilla and Eckstein 



[49] Roy 

 

 

1958), where the fundamental idea was to “compare the gains and losses 
associated with an investment project or policy” (Pearce 1998, 84). Over the 
next three decades, cost–benefit analyses became more institutionalized and 
widespread (Maass 1966; Marglin 1967; Musgrave 1969; Little and Mirrlees 
1968, 1974; Dasgupta 1972), incorporating the framework of welfare 
economics, with benefits being expressed as a utility function. In the 1990s, 
social cost–benefit analyses increasingly included environmental factors in 
projects (Pearce 1998; Vanclay and Bronstein 1995; Quah and Tan 1999; 
Wattage et al. 2000; Crookes and de Wit 2002). 

In 2006, the World Health Organization (WHO) formulated guidelines for 
conducting cost–benefit analyses of household energy and health 
interventions (Hutton, Rehfuess, and WHO 2006). They specify what should 
be counted as costs and benefits to provide a holistic idea about the gains or 
losses from a policy intervention, and health is an important aspect of their 
framework. This framework has been used by Hutton, Rehfuess, and Tediosi 
(2007) and Malla et al. (2011) to perform cost–benefit analyses at the regional 
and multi-country levels, respectively, by Jeuland and Pattanayak (2012) and 
Irfan, Cameron, and Hassan (2021) for clean cooking interventions in India 
and Pakistan, respectively, and by Haselip and Rivoal (2017) and Larsen, 
Dalaba, and Wong (2020) to analyse LPG interventions in Tanzania and three 
different LPG and cookstove interventions in Ghana, respectively. In all 
these countries, LPG interventions were found to be more beneficial 
compared to stove interventions, albeit under different discount rates (Malla 
et al. 2011; Isihak, Akpan, and Adeleye 2012; Rivoal and Haselip 2017; Larsen, 
Dalaba, and Wong 2020; Irfan, Cameron, and Hassan 2021). 

2. RESEARCH GAPS 

One of the primary barriers to the adoption of clean, modern energy 
sources—such as LPG and electricity—is the cost. Cost has typically been 
calculated using levelized cost-of-energy or life cycle analysis in the literature 
(Jain et al. 2015; Gould and Urpelainen 2018; Singh and Gundimeda 2014; 
Leach et al. 2021), which gives an idea about the cost-effectiveness of energy 
sources. However, this method does not provide an estimate of the 
expenditure that a household incurs. Moreover, a levelized cost-of-energy or 
life cycle analysis requires information on stove characteristics, including 
stove efficiency and lifetime, and which differ with stove types and are not 
relevant for this analysis. This analysis tries to emphasize the importance of 
current fuel prices, which constitute the variable cost for a household. These 
shortcomings need to be addressed. Hence, the cost to the household is 



 Ecology, Economy and Society–the INSEE Journal [50]  

calculated as a simple addition of the fixed cost and a variable cost based on 
current prices rather than using levelized cost. 

Most of the recent literature on fuel use or the energy transition in India 
focuses either on the factors affecting fuel use and the transition to clean 
fuels in specific regions of the country, using national-level consumer or 
household surveys (Farsi, Filippini, and Pachauri 2007; Pandey and Chaubal 
2011; Gould and Urpelainen 2018), or on the evaluation of the policies 
implemented by the government to facilitate such a clean energy transition 
(Dabadge et al. 2018; Harish and Smith 2019). However, there is a dearth of 
cost–benefit analysis studies that evaluate whether an intervention promoting 
LPG use is socially beneficial. Moreover, despite the tremendous progress in 
electricity access among rural households during 2016–2019, a cost–benefit 
analysis of switching to electricity as a cooking fuel has not been conducted 
yet for rural households in India. Since interventions are essential for rural 
households in a developing country such as India to make the transition to 
clean cooking, performing a cost–benefit analysis is relevant to determine the 
policy approach that will aid in the transition to clean cooking. 

Many studies have shown LPG interventions to be socially beneficial in 
developing countries like Nigeria, Tanzania, Ghana and Pakistan (Isihak, 
Akpan, and Adeleye 2012; Rivoal and Haselip 2017; Larsen, Dalaba, and 
Wong 2020) and LPG to be comparatively more beneficial than electric 
cooking (Jeuland and Pattanayak 2012; Irfan, Cameron, and Hassan 2021). 
However, these findings are specific to the country, the intervention, and the 
assumptions about cost and benefit made by the authors. In the last decade, 
there were two cost–benefit analysis studies on clean cooking energy in India 
conducted by Jeuland and Pattanayak (2012) and by Patel et al. (2016). The 
frameworks used in these studies were different, with the former using the 
WHO framework and the latter using the analytical hierarchical process to 
incorporate the preferences of rural households in estimating the costs and 
benefits of cooking with different fuel and stove options. While Jeuland and 
Pattanayak (2012) focussed on improved cookstoves and their net private 
and net social value, Patel et al. (2016) assigned weights to all factors 
constituting a cost or benefit to the user and used the benefit–cost ratio to 
rank fuel alternatives. The common aspect in both these studies is that the 
household is the unit of analysis. However, both of these studies do not give 
importance to costs accruing to the government when investing in 
interventions to make these clean energy sources available to households. 

3. OBJECTIVES 

There is not only very limited literature on cost–benefit analyses of clean 
cooking energy interventions in India, but no recent study has examined the 



[51] Roy 

 

 

costs incurred by a household when switching from solid fuels to LPG or 
electricity for cooking. This paper aims to address these two research gaps by 
estimating the costs to a household when LPG or electricity is used for 
cooking through a cost–benefit analysis of interventions involving the 
universal provision of LPG or electricity for cooking in rural households. 
This paper has two objectives. Firstly, it tries to understand the cost to a 
household in switching from solid fuels to LPG or electricity for cooking and 
highlights the importance of supply in household cooking energy-use 
patterns. Secondly, this paper performs a social cost–benefit analysis using 
costs to the government, environmental costs, and social benefits accruing 
from two government interventions—the universal provision of LPG for all 
rural households and universal provision of electricity for cooking in all rural 
households. 

4. COST TO A HOUSEHOLD OR PRIVATE COST 

The rationale for calculating the private cost to a household in the transition 
to cooking with LPG or electricity is to find which energy source is financially 
cheaper for a rural household. The World Bank standard as per O’Sullivan 
and Barnes (2006) is used to calculate the amount of LPG or electricity 
required when they are used as exclusive cooking fuels in the household. 
According to the World Bank study of household energy use in developing 
countries, an average household of five members requires 5 GJ of cooking 
energy a year, with a per capita consumption of 1 GJ a year (O’Sullivan and 
Barnes 2006). The average household size for rural households in India in 
2019–2021 was 4.5 (IIPS 2022). Using the World Bank standard for annual 
consumption of useful energy for cooking per capita, the household cooking 
energy consumption per year is 4.5 GJ and—given that the energy content in 
an LPG cylinder is 46 MJ per kg and the conversion efficiency is 60%—this 
translates to 11.5 LPG cylinders a year. Therefore, an average household of 
five members should have access to 12 LPG cylinders per year for a complete 
transition to cooking with LPG. Similarly—given that each kilowatt (kW) is 
equivalent to 3.6 MJ of energy and 85% of this energy is transferred to the 
cooking vessel—the amount of electricity required for cooking exclusively 
with electricity is 1,471 units a year. The assumptions for conversion 
efficiencies have been taken from the World Bank study (O’Sullivan and 
Barnes 2006) and Sweeney et al. (2014). 

The cost to a household in the transition to LPG or electricity is the total 
cost borne by a household in making this transition—that is, the sum of the 
fixed cost and the variable cost in this transition. The costs of procuring a 
connection and stove for LPG use are taken as the fixed cost to switch to 



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LPG. This amounts to ₹4,800 for the connection, hose pipe, pressure 
regulator, security deposit for the cylinder, and a double burner stove (Jain et 
al. 2015). Sharma and Dash (2022) use the cost of the LPG connection and 
the cost of refilling cylinders as the energy dimension based on which 
households make decisions on cooking fuel. In contrast, an electricity 
connection is primarily taken for lighting. If electricity is to be used for 
cooking as well, the connection load must be higher, which means that the 
base charges will be higher. These base charges for the connection load are 
added to constitute the variable cost of electricity along with the tariff. The 
fixed cost of using electricity for cooking includes the cost of procuring an 
induction cooktop of 1,500 W rating and flat-bottomed utensils used 
specifically for induction cooking, the prices for both of which are obtained 
from online marketplaces such as Amazon and Flipkart. The variable cost of 
LPG is the price paid for the cylinder refills that a household purchases. The 
price of an LPG cylinder is taken as the price of one cylinder in Delhi, which 

was ₹744 in April 2020 (GoI 2020). The average domestic tariff rate is taken 

as ₹5 per unit, and the average base charge for each kW of connection load 

is taken as ₹50 (obtained from tariff schedules of all states for 2019–2020 
from their respective electricity regulatory authorities). All costs are calculated 
based on 2020 prices (pre-COVID) and the domestic tariff rates for 2019–
2020, expressed in rupees. Costs are calculated on an annual basis for three 
categories of rural households: (i) those that have only purchased the 
connection and stove (fixed cost) or simply made the switch to LPG or 
electricity, (ii) those that are using LPG or electricity in their first year (fixed 
cost and variable cost), and (iii) those that have already been using LPG or 
electricity for more than one year (variable cost). The costs to a household 
for both LPG and electricity are given in Table 1. 

The cost incurred by a household in switching from solid fuels to LPG or 
electricity for cooking—the fixed cost—is almost similar for both. If a 
household opts for a cheaper stove and utensils for electric cooking, then 
electricity can be the cheaper option for the household. As the household 
becomes a primary user of LPG or electricity, in the first year—when both 
fixed and variable costs must be incurred—and subsequent years—when 
only variable costs must be incurred—the annual costs the household has to 
bear will be lower in the case of electricity. These results are similar to those 
of the findings of Hakam et al. (2022) and Anggono et al. (2022) in Indonesia, 
who have found that the energy costs of using electricity for cooking 
(including both fixed costs and variable costs) will be lower than the cost of 
cooking with LPG. The question, therefore, is why has there been a greater 
increase in switching to LPG compared to electric cooking among rural 
households? 



[53] Roy 

 

 

Table 1: Annual Cost to the Household When Cooking with LPG and Electricity 

(2020, ₹)  

Cost to the Household LPG Electricity 

Fixed cost in switching 
(connection + stove) 

4,800 (connection + 
stove) 

2,000 to 3,000 (stove) + 1,500 
to 2,000 (utensils) = 3,500 to 
5,000* 

Cost to household in the 
first year of switching  

Fixed cost + variable 
cost on refills = 

[4,800 + (12  744)] 

Fixed cost + variable cost on 
units consumed (including 
monthly base charges) = 

[5,000 + (50  12) + (5  
1,471)] 

 13,734 11,455 to 12,955 

Cost to the household in 
subsequent years of using 
the fuel 

Variable cost on 

refills = (12  744) 

 

= [(50  12) + (5  1,471)] 

 8,934 7,955 

*Note: The fixed cost of electricity does not include connection charges, as the 
electricity connection is taken as part of lighting energy expenses in the household. 
Source: Jain et al. (2015); GOI (2020a), tariff schedules of state electricity regulatory 
authority for all states (Jain 2022). 
 

There are two possible answers to this. First, electricity supply is not adequate 
or reliable in rural areas. Second, there have been no government 
interventions to promote electric cooking in the country. Although almost 
100% of rural households have access to an electricity connection, they have 
a basic connection load of 0.5 kW, which is inadequate to operate an 
induction cooktop, and the supply is uncertain because of frequent power 
failures and blackouts (Jain et al. 2015; Banerjee et al. 2016). Moreover, in the 
last decade, clean cooking has been synonymous with access to LPG, as it is 
a clean and convenient fuel option that most households are already familiar 
with. Electricity is a popular lighting energy alternative to kerosene lamps, 
and access to the basis 30–50 units of electricity have been a result of rural 
electrification schemes (Jain et al. 2015). The need for government 
intervention arises because modern energy sources require a strong supply 
and distribution infrastructure as well as financial incentives for greater 
adoption since they are expensive. Banerjee et al. (2016) report that when 
rural households in Himachal Pradesh were given subsidized induction 
cooktops, it replaced the secondary fuel in a majority of households; 
traditional biomass was replaced by LPG for primary use. This was also 
observed in Cameroon where the availability of and familiarity with LPG for 
cooking deterred the use of electric cooking, which was seen as a secondary 
option (Rubenstein et al. 2022). Gould et al. (2020) have found that in 



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Ecuador, where simultaneous subsidy programmes for the adoption of LPG 
and induction stoves are operational, more rural households adopt LPG than 
electric cooking. Hence, in a country where LPG is popular as a clean cooking 
fuel and there are efforts to scale up its adoption, electricity needs aggressive 
policy support and a stable and dependable distribution network to compete 
with LPG. Nonetheless, despite the cost advantages of electric cooking at the 
household level, the question remains as to whether the universal provision 
of electricity as a cooking fuel for all rural households is socially beneficial or 
not. 

5. SOCIAL COST–BENEFIT ANALYSIS 

Social cost–benefit analysis is a method of evaluating policy interventions 
through comparisons of the costs and benefits accruing from these 
interventions. Here, this analysis has been conducted using the WHO 
framework to understand what can count as costs and benefits and how the 
benefit–cost ratio and net present value (NPV) should be calculated for both 
interventions—namely, the universal provision of LPG to all rural 
households and the universal provision of electricity for cooking to all rural 
households. The time for the interventions has been taken as 10 years (up to 
2030). A social discount rate of 3% has been used. 

6. COSTS OF THE INTERVENTIONS 

6.1. Cost to the Government 

The cost to the government includes the cost that the government must bear 
to provide LPG or electricity universally to all rural households. For universal 
provision of LPG, 60% of the rural households that do not use LPG as a 
primary cooking fuel are to be provided with an LPG connection or gas 
stove, and the other 40% are to be given 12 LPG cylinders a year. In the 
scenario of universal provision, it is assumed that the government bears the 
entire cost of importing and subsidizing LPG at the rate at which the subsidy 
was given in 2019–2020 to PM Ujjwala beneficiaries, that is, 30% of the 
market price (GOI 2020). Hence, the cost to the government in the LPG 
intervention is the sum of the cost of importing 60% of the LPG and 
subsidizing LPG for 60% of rural households that still depend on solid fuels 
as the primary source of energy for cooking. 

The cost to the government for the universal provision of electricity as a 
cooking fuel to all rural households is the sum of the cost of providing 
induction cooktops to all rural households, the cost of extending the load to 
2 kW for supporting the operation of induction cooktops, and the cost of 
supplying electricity (base charges in terms of load and tariff for the units 
consumed) to all rural households. Since less than 2% of rural households 



[55] Roy 

 

 

use electricity as cooking fuel, the assumption here is that none of the rural 
households possess an induction cooktop or utensils. Consequently, the fixed 
cost of providing the stove and utensils for all rural households—along with 
the cost of supplying electricity (variable cost)—has to be borne by the 
government in the scenario of universal provision. 

6.2. Environmental Costs 

The environmental costs of LPG are not very significant because it is a by-
product of the process of crude oil refining. However, if the environmental 
impact of LPG has to be extrapolated from the environmental impact of 
crude oil refining, then a proportion of the carbon intensity of crude oil 
production can be attributed to LPG production. According to Jing et al. 
(2020), India’s oil refining carbon intensity is 50.4 kg CO2 equivalent per 
barrel, but the proportion of LPG production was just 5% of the total crude 
oil production in 2019–2020. Using that threshold, the carbon and 
greenhouse gas emissions from LPG production are calculated to be 21,773.5 
tonnes of CO2. Due to the lack of social cost measures for greenhouse gases 
other than carbon-based gases, the estimate of the social cost of carbon given 
by Ricke et al. (2018) is used to arrive at a monetary value of the cost of carbon 
arising from the increased production of LPG to support universal rural 
provision. 

In the case of electricity, about 70% of the electricity generated in the country 
is from coal-based power plants, which emit CO2 and other greenhouse gases 
during production. There is no universally accepted method of calculating 
the environmental impact of these emissions. Nonetheless, a study by Mittal, 
Sharma, and Singh (2012), which estimates the greenhouse gas and particulate 
matter emissions from coal-based power plants, concludes that for every kW 
of power generated, there is an emission of 0.8 to 1 kg of CO2. Therefore, 
the environmental costs of the CO2 emissions from coal-based electricity 
generation for the universal provision scenario are calculated using the 1 kg 
CO2/kW threshold. 

7. BENEFITS OF THE INTERVENTION 

According to the WHO guidelines for cost–benefit analyses of energy 
interventions, the impacts of the interventions essentially include health 
benefits, time savings, productivity gains, fuel savings, and local and global 
environmental benefits. The transition to both LPG and electricity is 
assumed to happen from solid fuels, which have a detrimental impact on 
health; lead to time loss because fuel collection and cooking are time-
intensive; cause a loss in output, and harm the environment in the form of 



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carbon emissions and deforestation. Hence, in a way, the benefits of 
switching to LPG or electricity also include the averted costs of using solid 
fuels. As a result, these benefits are assumed to be the same for both LPG 
and electricity. Any qualitative differences (status, convenience, familiarity, 
etc.) for either fuel LPG or electricity, which could contribute to specific 
benefits from either, have not been acknowledged as a significant part of the 
economic or social benefits. 

7.1. Health Benefits 

To evaluate the health benefits, two metrics are considered: DALYs and 
deaths averted due to a reduction in indoor air pollution. DALYs and deaths 
due to household air pollution in 2019 in India were 21 million and 0.61 
million, respectively (Pandey et al. 2020). For this analysis, we assume the cost 
of averted DALYs for every rural household switching to LPG to be one-
third of the gross domestic product (GDP) per capita, based on Woods et al. 
(2012) and Ochalek, Lomas, and Claxton (2018), and the cost of averted 
death to be equal to the GDP per capita. This paper focuses on rural 
households, but rural GDP estimates are not available from official data 
sources, which is why GDP per capita1 for India has been used. However, 
we assume that 90% of these DALYs and deaths from household air 
pollution are in rural households, as only 10% of urban households were 
using solid fuels as the primary energy for cooking in 2019–2021 according 
to NFHS-5 (IIPS 2022). 

7.2. Averted Healthcare Expenditure 

The average expenditure per rural person for non-hospitalized treatment of 

the diseases caused by indoor air pollution for 15 days is ₹649. This implies 
that the monthly expenditure on non-hospitalized treatment for a rural 

person will come to ₹1,300. Therefore, the annual averted health care 
expenditure or annual health care savings due to a transition to clean cooking 

fuels will be ₹15,600 per person. For this analysis, we assume that there is 
one person in each rural household using solid fuels as the primary cooking 
fuel, who has to bear this expenditure in a year. However, to arrive at a more 
realistic estimation of the averted healthcare expenditure, we have assumed 
treatment-seeking behaviour to be prevalent only among 50% of rural 
households using solid fuels. 

7.3. Output Loss Averted 

 
1 Linear forecast values for GDP per capita have been used since health benefits are 
assumed to accrue at the end of the intervention period. 



[57] Roy 

 

 

The productivity gains have been calculated by Hutton, Rehfuess, and 
Tediosi (2007) using the human capital approach, wherein the number of 
days of illness averted is multiplied by the average gross national income per 
capita of that region. Isihak, Akpan, and Adeleye (2012) follow a similar 
approach. This paper uses a slightly different approach by considering the 
loss in output averted rather than productivity gain from not missing work. 
According to the Lancet study on the Global Burden of Diseases 2019 (Pandey et 
al. 2020), the economic loss due to output lost from premature deaths and 
morbidity attributable to household air pollution as a percentage of GDP in 
India was 0.49% in 2019. A major part of these premature deaths and 
morbidity were in the rural sector, as they have a higher number of solid fuel 
users. We have assumed that 90% of this economic loss will be averted if 
rural households switch to using clean cooking fuels. 

7.4. Time Savings 

Time savings are an essential benefit accruing from the use of clean cooking 
fuels, because with LPG and electricity, no time is lost in fuel collection and 
a significant amount of time is saved while cooking because of the higher 
efficiency of LPG and electric stoves. The Time Use Survey 2019 conducted by 
the NSS finds that in India, the time saved in the collection of fuel is 74 
minutes (GOI 2020b). Since it is women who are generally involved in fuel 
collection and cooking, we have considered the daily wage for a rural woman 
involved in agricultural activities such as sowing, transplanting, weeding, or 

harvesting, which was ₹265 in 2019. We assume that 50% of the time saved 
is used for income generation, similar to Larsen, Dalaba, and Wong (2020). 

7.5. Fuel Savings 

Fuel savings are assumed to be negligible in this analysis, because the 
alternatives to clean, modern energy sources like LPG and electricity in rural 
India are firewood, dung, crop waste, grass, charcoal, and so on—all of which 
are available free of cost or are extremely cheap compared to LPG or 
electricity. As a result, the transition to LPG or electricity is from a solid fuel 
that does not have a market price, so the fuel savings are assumed to be zero. 

7.6. Environmental Benefits 

Environmental benefits have been a part of cost–benefit analyses of energy 
interventions in studies by Hutton, Rehfuess, and WHO (2006), Jeuland and 
Pattanayak (2012), and Isihak, Akpan, and Adeleye (2012). However, each of 
these studies uses a different method to evaluate the value of deforestation 
or the cost of carbon and greenhouse gas emissions that may result from 
solid fuel use. The environmental effects of switching to LPG or electricity 



 Ecology, Economy and Society–the INSEE Journal [58]  

from firewood include averted deforestation and lower carbon emissions 
since firewood is the most commonly used solid fuel for cooking in rural 
households. For this analysis, the environmental effect of averting 
deforestation is used as the measure of environmental benefits. The 
economic value of forests is taken from the report on the revision of rates of 
the NPV applicable for different classes/categories of forests (CAG 2014). 
Specifically, the maximum total economic value of forests—after adjusting 
for double counting—and the amount of averted deforestation is obtained 
from the World LPG Association report on substituting LPG for wood, 
where the averted deforestation from a household switching to LPG has been 
calculated (WLPGA 2018). Since substituting wood with electric cooking will 
also bring down deforestation by the same amount as a transition to LPG 
will, we assume that the averted deforestation for both fuels is the same. 

8. SOCIAL RATE OF DISCOUNT 

In the cost–benefit analysis, future benefits and costs are discounted relative 
to present benefits and costs to obtain their present values. The need to 
discount arises because there is an opportunity cost to the resources used—
they could earn a positive return elsewhere and most people prefer to 
consume in the present rather than the future. The social discount rate is one 
of the most important inputs in cost–benefit analyses due to its major 
influence on present-value calculations, thereby playing an influential role in 
determining whether a project passes or fails a cost–benefit test. Typically, a 
social discount rate between 3% and 6% is used for calculating the present 
values of costs and benefits for clean cooking interventions (Hutton, 
Rehfuess, and Tediosi 2007; Jeuland and Pattanayak 2012). This paper uses a 
discount rate of 3% to find the benefit–cost ratio and NPV of both 
interventions. 

The present value of social benefits and social costs have been calculated to 
arrive at the benefit–cost ratio and the NPV of the interventions based on 
the formulae given in Box 1. Costs and benefits are expressed in crores of 
rupees, and the prices and tariffs for the year 2021 (post-COVID) have been 
used to calculate the variable costs. Hence, the first year of intervention is 
assumed to be 2021, and the forecasted period of nine years ends in 2030. 
There may be a possible effect of the COVID-19 pandemic and economic 
lockdown on prices, tariffs, and even energy-use patterns. Nonetheless, 
rather than making assumptions, this paper performs an uncertainty analysis 
to determine how the benefit–cost ratio and the NPV might change with 
changes in the values of the variables used in the calculation. 

 



[59] Roy 

 

 

Box 1: Formulae for Calculating Social Cost, Social Benefit, Benefit–Cost Ratio, and 
Net Present Value 

Social cost (SC) = Cost to the government (fixed cost + variable cost) + 
environmental costs (if any) 
Social benefits (SB) = Health-related income effects + averted healthcare 
expenditure + output loss averted + time savings + fuel savings + environmental 
effects 

Benefit–Cost ratio (BCR) = Present value of total social benefits (PVTSB)/present 
value of total costs (PVTC) 
BCR = {TSB/(1 + r)n}/{TC/(1 + r)n}, where r denotes the social discount rate 
and n denotes the number of years for the intervention 
Net present value (NPV) of intervention = Present value of total social benefits 

− present value of total social costs 

NPV = TSB/(1 + r)n − TSC/(1 + r)n, where r denotes the social discount rate and 
n denotes the number of years for the intervention 

Source: Hutton, Rehfuess, and WHO (2006). 

9. FINDINGS 

Table 2: Social Cost for LPG and Electricity Interventions by 2030 (₹) 

Social Cost LPG Electricity 

Cost to the government  Cost of importing and 
subsidizing LPG for all 
rural households 

Cost of induction 
cooktop and load 
extension to all rural 
households + cost of 
supplying additional 
electricity 

 = 166,212 crore = 98,410.5 crore 

Environmental costs Part of the carbon 
emissions from crude oil 
drilling and refining 

Cost of carbon 
emissions from coal-
based power plants 

 = 14,044 crore = 114,500 crore 

Total social cost Cost to the government 
+ environmental costs 

Cost to the government 
+ environmental costs 

 = 180,256 crore = 212,910.5 crore 

Note: The total number of rural households is 17.24 crore and 60% still use solid 
fuels. 
Source: Calculated by the author from Table 1 and based on assumptions made by 
the author. 

9.1. Social Costs 

The cost to the government and environmental costs together make up the 
total social costs of both these interventions. Table 2 shows that the cost to 
the government is lower for the universal provision of electricity for rural 



 Ecology, Economy and Society–the INSEE Journal [60]  

households for cooking, owing to the high price of LPG cylinder refills, 
which leads to increased recurrent costs. However, the difference is not 
significant. Environmental costs measured using carbon emissions and the 
social cost of carbon are eight times higher for electricity. This is because 
70% of the electricity generated in the country is from coal, and according to 
the United States Environmental Protection Agency (EPA), coal has the 
highest carbon intensity and produces the most emissions from combustion 
compared to other fossil fuels such as natural gas, petroleum, or even LPG 
(EPA 2023). Hence, the environmental costs of the universal provision of 
electricity for cooking in rural households are higher. As a result, the social 
costs of the universal provision of LPG for rural households are significantly 
lower than the corresponding costs for the universal provision of electricity. 

9.2. Social Benefits 

Although the health benefits are qualitative, the cost of averted DALYs and 
the cost of averted deaths have been used as estimates of the health effects 
of the interventions, as in Malla et al. (2011) and Larsen, Dalaba, and Wong 
(2020). This study uses a threshold of one-third of the GDP per capita as the 
cost of averted DALYs, which is much lower than the threshold used in in 
Ghana in Larsen, Dalaba, and Wong (2020), which is 1.3 to 1.6 times the 
GDP per capita for LPG interventions, as well as the threshold given by the 
WHO, which uses one to three times the GDP per capita (WHO CMH and 
WHO 2001) (see Table 3 below). 

Hutton, Rehfuess, and Tediosi (2007), Isihak, Akpan, and Adeleye (2012), 
and Irfan, Cameron, and Hassan (2021) include reduced health expenditure 
as a part of the social benefits obtained from the transition to cleaner cooking 
fuels. This study also estimates healthcare expenditure averted using the 
amount spent on treatment and assuming the proportion of rural households 
seeking treatment. Treatment-seeking behaviour has not been addressed in 
other studies, but it is important in this calculation, as the focus here is on 
rural households, whose members generally avoid seeking treatment for most 
diseases unless it is economically viable. However, despite these conservative 
assumptions, the averted healthcare expenditure is the largest part of the total 

social benefits at ₹80,683 crore. 

Upon switching to clean cooking fuels, time is saved in cooking as well as 
fuel collection—a crucial aspect of their benefits. Hutton, Rehfuess, and 
Tediosi (2007), Malla et al. (2011), Jeuland and Pattanayak (2012), Isihak, 
Akpan, and Adeleye (2012), Larsen, Dalaba, and Wong (2020), and Irfan, 
Cameron, and Hassan (2021) all include time savings in their analyses by 
either using wage rates or gross national income per capita to express it in 
monetary terms. This paper uses rural wages of women involved in 



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agricultural occupations to take into account the gender bias involved in 
cooking and the collection of fuel. Other than that, the proportion of time 
saved that is used for income generation is higher than that assumed by 
García-Frapolli et al. (2010) for rural Mexican households—where 25% of 
the time saved was used for income generation—and the same as that used 
in Larsen, Dalaba, and Wong (2020) for households in Ghana—50% of 
saved time is used for income generation—as one of the interventions 
studied here is the universal provision of LPG, along the same lines as the 
LPG intervention in Ghana. With these assumptions, time savings are the 

second-largest part of the total social benefits at ₹76,752.5 crore (see Table 3 
below). 

Table 3: Benefits of LPG and Electricity Interventions by 2030 (₹) 

Benefit LPG and Electricity 

Health-related income effects (DALYs 
and deaths averted in terms of GDP per 
capita) 

90% of [0.33  GDP per capita  

DALYs averted + GDP per capita  
deaths averted] 

0.9  [ 0.33  142,603  2.1 + 142,603 

 0.06]  
= 96,642 crore 

Averted healthcare expenditure 50% of the rural households not using 

LPG or electricity  average per capita 
treatment expenditure 

0.5  (0.6  17.24)  15,600 crore 
= 80,683 crore 

Output loss averted (gains in 
productivity) 

90% of output loss (economic loss 

percentage  GDP) 

0.9  0.0049  13,558,473 crore = 
59,793 crore 

Time savings (in terms of rural wages 
for women in agriculture) 

Wages saved per rural woman per year 

 percentage of rural women making 
the transition 

7,420  (0.6  17.24) = 76,752.5 crore 

Environmental effects (averted 
deforestation) 

1,724,000 hectares (total deforestation 

averted by all rural households)  2.4 
lakh per hectare/year (economic value 
of forest) = 41,376 crore 

Total social benefits of LPG and 
electricity  

355,246.5 crore 

Note: The total number of rural households is 17.24 crore and 60% still use solid 
fuels. 



 Ecology, Economy and Society–the INSEE Journal [62]  

Source: GOI (2023), Pandey et al (2021), WRRI (2019), GOI (2020b), WLPGA 
(2018), CAG (2014) 

 

9.3. Benefit–Cost Ratios and Net Present Values 

The benefit–cost ratios for both interventions show that the universal 
provision of LPG has a benefit–cost ratio greater than the universal provision 
of electricity, although both interventions have greater social benefits 
compared to social costs (see Table 4 below). Due to the significant 
environmental costs of providing electricity, 70% of which is coal-based, the 
NPV is smaller for the electricity intervention compared to the LPG 
intervention. The NPV of the LPG intervention is significantly higher, 
indicating that it is more socially beneficial for the government to invest in 
the universal provision of LPG for rural households in India. In studies by 
Rivoal and Haselip (2017), Larsen, Dalaba, and Wong (2020), and Irfan, 
Cameron, and Hassan (2021), involving Tanzania, Ghana, and Pakistan, 
respectively, the benefit–cost ratio for LPG interventions, especially in the 
form of universal provision of LPG, was greater than one. However, Irfan, 
Cameron, and Hassan (2021) find that universal access to electricity for 
cooking in Pakistani households also has a benefit–cost ratio greater than 
one, although it is less than that for LPG, similar to the results in India. 

Table 4: Summary of Results of Cost–Benefit Analysis of LPG and Electricity 

Interventions in 2030 (₹) 

 Universal Provision 
of LPG 

Universal Provision of 
Electricity 

Present value (social 
benefit) 

272,267 272,267 

Present value (social 
cost) 

138,151 163,178 

Benefit–cost ratio 1.97 1.67 

Net present value 134,116 109,089 

Source: Calculated by the author based on the formulae given in Box 1. 

As a part of the uncertainty analysis, this analysis considers two simultaneous 
changes in the cost to the government for LPG interventions due to an 
increase in cylinder prices and a decrease in the environmental costs of 
electric cooking resulting from an increase in the proportion of electricity 
generated from renewable resources. If there is a 10% increase in the cost to 
the government for LPG interventions and a 10% reduction in the 
environmental costs of electricity interventions, the total social cost of LPG 

interventions will be ₹196,877.2 crore and the total social cost of electricity 



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interventions will be ₹201,460.5 crore. Table 5 shows the benefit–cost ratios 
and NPVs in this case. 

Table 5: Summary of Results of Cost–Benefit Analysis at Higher Prices of LPG and 

Lower Environmental Costs of Electricity, 2019–2020 (₹) 

 Universal Provision of 
LPG 

Universal Provision of 
Electricity 

Present value (social 
benefit) 

272,267 272,267 

Present value (social 
cost) 

150,890 154,403 

Benefit–cost ratio 1.8 1.76 

Net present value 121,377 117,864 

Source: Calculated by the author based on the formulae given in Box 1. 
 

Reductions in the environmental costs of the electricity intervention increase 
the benefit–cost ratio of the universal provision of electricity to 1.76, also 
increasing the NPV significantly. Although the NPV of the universal 
provision of electricity is still lower than that of the universal provision of 
LPG, both interventions are socially beneficial with benefit–cost ratios 
greater than one and very little difference between the respective benefit–
cost ratios. The 10% hike in cost to the government decreases the benefit–
cost ratio for the universal provision of LPG by 9%, whereas the decrease in 
environmental costs by 10% increases the benefit–cost ratio for the universal 
provision of electricity by 5.4%. This implies that if the cost of importing and 
subsidizing LPG keeps increasing, the benefit–cost ratio for LPG 
interventions will fall more rapidly compared with the rise in the benefit–cost 
ratio of electricity interventions if the environmental costs of electricity keep 
decreasing by the same magnitude. 

The cost of importing LPG is dependent on the import parity price of LPG, 
which is determined by the world LPG price and the exchange rate between 
the Indian rupee and the US dollar. The rest of the charges added to the 
import price of LPG to obtain the final retail price are determined by the 
government. In the last decade (from 2010–2011 to 2019–2020), the average 
price of an LPG cylinder has increased by 84%, and it shows an increasing 
trend (MoPNG 2019–2020). As a result, there is a possibility that the costs 
to the government for providing LPG will increase over the next decade and 
bring down both the benefit–cost ratio as well as the NPV of LPG 
interventions. In the case of electricity, from 2010 to 2018, generation from 
coal, oil, and natural gas has decreased from 80% of the total to 76%, and 
generation from renewable sources has increased from 16% to 21% of the 
total. Given the declining trend in fossil fuel–based power generation, 



 Ecology, Economy and Society–the INSEE Journal [64]  

including coal-based power, and the increasing trend in renewable energy–
based electricity, there is a possibility that the environmental costs of 
universal provision of electricity for cooking will fall in the future. This can 
increase the benefit–cost ratio of interventions in which electricity is supplied 
to all rural households for cooking. Therefore, from the perspective of the 
government, the challenge is to decide whether to provide LPG or electricity 
as a cooking fuel to rural households. 

However, given current trends, the more important question is whether an 
increase in rural demand for LPG or electricity can be supported at all. From 
2009–2010 to 2019–2020, there has been a 72% increase in the total 
electricity generated. If all rural households consume 1,471 kWh in a year for 
cooking with electricity exclusively, the total electricity required is 253,600 
GWh, which is 18.25% of the total electricity generated in 2019–2020. 
Therefore, the rural electricity generation required to support electric cooking 
in all rural households is a small part of the projected increase in electricity 
generation over the next decade. The bigger challenge, however, is the cost 
of increasing the installed capacity and strengthening the distribution and 
transmission network to make the availability of electricity adequate and 
reliable enough to be used as a source of cooking energy. 

On the other hand, the challenge for LPG is not only increased demand 
pressure due to the increase in rural consumption of LPG but also the 
growing proportion of imports in the LPG available. The domestic 
consumption of LPG has increased more than 100% between 2010–2011 
and 2019–2020. However, an increase in rural consumption will imply an 
additional requirement of 29,377 TMT of LPG, which will be 89.5% of the 
total domestic LPG consumption in 2030 (based on a time-based linear 
forecast). In 2019–2020, about 58% of the total available LPG in the country 
was being imported. If about 60% of the rural LPG consumption is met 
through imports, then imports for rural LPG consumption alone will 
constitute 50% of the total imports in 2030, and the value of the imports at 

the current import price of ₹33 per kg of LPG will be 69% of the total LPG 
import bill in 2030 (based on time-based linear forecasts). Hence, as the 
demand for LPG rises in rural households, there will be higher imports of 
LPG and, thus, a higher import bill. This can be pushed onto consumers by 
increasing the price of LPG since it is the government that decides the price 
of LPG cylinders. 

10. CONCLUSION AND POLICY IMPLICATIONS 

This paper tries to determine whether cooking with electricity or LPG alone 
can be a beneficial alternative to traditional fuels for rural households, both 
at the household and social levels. With the limited data available, and by 



[65] Roy 

 

 

using the framework for calculating the costs and benefits of energy 
interventions given by the WHO (Hutton, Rehfuess, and WHO 2006), this 
paper establishes that, for a household, the transition from traditional fuels 
to electricity may be more cost-effective compared to a transition to LPG, 
but it is more socially beneficial for the government to invest in universal 
provision of LPG compared to electricity. The universal provision of 
electricity for cooking for all rural households has a benefit–cost ratio greater 
than one and a significant NPV when the proportion of renewable energy in 
electricity generation increases and the environmental costs of electricity 
generation decrease. 

At the household level, the cost of switching to electric cooking from solid 
fuels is lower than the cost of switching to LPG, and this is supported by Jain 
et al. (2015), where a multidimensional approach is used to find that LPG is 
the second-most expensive fuel option for households in energy-poor states 
in India. However, the number of households switching to electricity is 
extremely low, which is somewhat counter-intuitive to the economic 
rationale that a consumer maximizes utility by purchasing the commodity that 
is available at the lowest price. One reason for this is that although electricity 
is cheaper than LPG, the supply is erratic and inadequate, especially in rural 
areas. Banerjee et al. (2016) find that rural households use electricity as a 
secondary fuel, even in states where tariffs are low and induction cooktops 
are provided at subsidized rates. The high price of LPG cylinders plays a 
major role in the economics of the rural household, which is why even with 
LPG interventions such as PM Ujjwala, the rate of refills and the sustained 
use of LPG is low among beneficiaries (Kar and Zerrifi 2018; Kumar et al. 
2019; Gill-Wiehl et al. 2021). In contrast, even though electricity is 
comparatively cheaper, rural households cannot ensure fuel security. As a 
result, the adoption of electricity as a cooking fuel is extremely low. 
Moreover, the overall cost of electricity may be lower than that of LPG, but 
the purchase of an induction cooktop and specific utensils for electric 
cooking poses an initial cost barrier for poor rural households, especially 
when LPG connections are provided for free or at subsidized rates. From the 
perspective of the government, it is socially beneficial to provide LPG to 
rural households rather than electricity, given India’s high dependence on 
coal-based power generation. This justifies the policies and programmes in 
the last few years that have tried to increase LPG penetration and adoption 
rates. 

Although the benefit–cost ratio of an LPG intervention for the universal 
provision of LPG for all rural households is greater than one, an increase in 
LPG cylinder prices leads to a fall in this ratio. Even in other developing 



 Ecology, Economy and Society–the INSEE Journal [66]  

countries such as Ghana, Tanzania, and Pakistan, it was found that LPG 
interventions have more social benefits than social costs (Larsen, Dalaba, and 
Wong 2020; Rivoal and Haselip 2017; Irfan, Cameron, and Hassan 2021). 
However, universal provision of electricity may provide almost the same 
amount of social benefits as social costs incurred owing to the intervention, 
any decrease in the environmental costs of the universal provision of 
electricity for cooking would cause the benefit–cost ratio to increase above 
one, making the electricity intervention socially beneficial. Therefore, the 
trade-off is between increasing dependence on LPG imports and a reduction 
in the environmental costs of electricity. The environmental costs of 
electricity are primarily due to 70% of the electricity being generated from 
coal, which has the highest carbon emissions among fossil fuels. If the 
proportion of coal-based electricity reduces and renewable power–based 
electricity increases, the environmental costs will come down, making 
universal electricity provision socially beneficial. 

There are three major limitations to this paper. There is no discussion on 
income and, therefore, it is not possible to determine the cost of LPG or 
electricity (as a cooking fuel) as a percentage of the income of rural 
households. Income is an important factor when it comes to cooking fuel use 
patterns, and any analysis of cooking fuel use is incomplete without a 
discussion on income. Various studies study the effect of income on the 
transition to clean cooking fuels (Viswanathan and Kumar 2005; Farsi, 
Filippini, and Pachauri 2007; Cheng and Urpelainen 2010; Lewis and 
Pattanayak 2012; Jain et al. 2015; Sharma and Dash 2022), and they find that 
income has a positive and significant effect on the use of LPG and electricity. 
The second limitation of this paper is not incorporating state-wise 
differences. The price of LPG, the domestic tariff rates, and rural household 
incomes differ in every state. An agricultural household in Punjab earns much 
more than an agricultural household in Jharkhand, and even the price of LPG 
and tariffs in these two states are different. As a result, the cost of cooking 
with LPG and electricity will be different in these two states, and electricity 
may no longer be the cheaper alternative, as is the case of Karnataka, 
Maharashtra, and Rajasthan, where LPG prices are the lowest but domestic 
tariff rates are very high. Lastly, this paper does not include the effect of 
COVID-19. The prices and tariffs, along with the energy-use patterns, may 
be different with the pandemic and economic lockdown and, hence, the cost 
to the household, cost to the government, and the energy-use patterns of 
rural households for the period between 2020 and 2022 may have been 
completely different from that for other periods. 

The transition to cooking with LPG or electricity in rural households is 
necessary to reap the social benefits in terms of better health, higher 



[67] Roy 

 

 

productivity, time savings, and environmental benefits. However, the critical 
issue is whether to continue promoting LPG alone and investing in the 
greater provision of LPG as a clean cooking fuel in rural households, as was 
done with PM Ujjwala and PM Garib Kalyan Yojana during COVID-19. An 
increase in the price of LPG will reduce the net social benefits of an LPG 
intervention. Hence, the question is: At which threshold level of import and 
price of LPG does universal provision of LPG cease to be socially beneficial? 
Electricity is completely produced domestically. Between 2015 and 2020, the 
investment in renewable energy for power generation and its share in 
electricity generation has increased. There is already potential for the 
environmental costs of electricity to reduce in the next few years—even a 
30% decline in this cost can make universal provision of electricity for 
cooking socially beneficial. Electricity is a clean energy alternative that must 
be considered for rural households, especially because the first step of access 
to an electricity connection has already been achieved. Increasing investment 
in renewable energy would make electricity cleaner and the supply more 
reliable. There are also opportunities for exploring off-grid options for rural 
households located in remote areas. 

Ethics Statement: I hereby confirm that this study complies with requirements of 
ethical approvals from the institutional ethics committee for the conduct of this 
research.  

Data Availability statement: The data used to support this research is available in 
a repository and the hyperlinks and persistent identifiers (e.g. DOI or accession 
number) are stated in the paper. 

Conflict of Interest Statement: No potential conflict of interest was reported by 
the author. 

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