Eight states have agreed to implement direct benefit of transfer in kerosene in 26 districts, the Ministry of Petroleum and Natural Gas said on Friday. The scheme will be implemented from April 1, 2016 and till then state governments will be consulted in the run up to the scheme.

The scheme will be implemented in three districts of Chhattisgarh, two in Haryana, three in Himachal Pradesh, six in Jharkhand, four in Madhya Pradesh, two in Maharashtra, three in Punjab and three in Rajasthan.

In these districts, the consumer will pay the un-subsidised price of kerosene at the time of purchase and subsequently the subsidy amount will be directly transferred to the bank account of the beneficiary, an official statement said.

“To avoid any inconvenience to the beneficiary through payment of un-subsidised price, subsidy shall be credited in advance during the initial purchase,” the statement added.

Further the government has also decided that states would be given a cash incentive of 75 per cent of subsidy savings during the first two years, 50 per cent in the third year and 25 per cent in he fourth year. This will be done to incentives the adoption of DBT in kerosene amongst states and union territories.

“In case, the states voluntarily agree to undertake cuts in kerosene allocation, beyond the savings due to DBT, a similar incentive will be given to those states and union territories,” the statement said.

Calculations of the savings will be based on the net savings in kerosene consumption at the state level from the baseline which would be 90 per cent of the 2015-16 allocation.

The implementing states will be advised to take all necessary steps to ensure that eligible and genuine beneficiaries particularly in rural areas are able to access the full entitlement of kerosene.

Kerosene subsidy outgo for the financial year 2014-15 was ₹ 24,799 crore. The government expects DBT in kerosene to ensure that genuine beneficiaries get the subsidy benefit while preventing illegal diversion.

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